[en] This paper studies the costs and benefits of fixed and flexible exchange rate regimes in the presence of endogenous intensive and extensive margins of trade. The net benefit depends on the levels and volatilities of those margins as well as on their correlation with consumers preferences. A fixed exchange rate regime is preferred for sufficiently high labour supply elasticities and lower love for product diversity. Delays between entry and production make fixed exchange rate regimes less attractive.
Disciplines :
Macroeconomics & monetary economics
Author, co-author :
PICARD, Pierre M ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
hamano, masahige; Faculty of Political Science and Economics, Waseda University
External co-authors :
yes
Language :
English
Title :
Extensive and intensive margins and exchange rate regimes
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