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Jacques Mazier, Gnanonobodom Tiou-Tagba Aliti (2012) World Imbalances And Macroeconomic Adjustments: A Three-Country Sock-Flow Consistent Model With Fixed or Flexible Prices”, Metroeconomica, vol. 63, n. 2, pp. 358-388

Url: Not available

DOI: 10.1111/j.1467-999x.2011.04141.x

Abstract: World macroeconomic adjustments are analysed with a three-country Stock-Flow Consistent (SFC) models. Three SFC models are considered, the first one with a fixed dollar–yuan parity including a version with Chinese foreign reserves’ diversification, the second with a flexible dollar–yuan parity which can be freely floating or following a more managed float, the third one being a generalization of the two others with flexible prices instead of constant prices. The fixity of the dollar–yuan parity limits the adjustments facing shocks and world imbalances while a more flexible dollar–yuan exchange rate appears as a powerful adjustment mechanism to reduce these imbalances.

Keywords: current account deficit, exchange rates, SFC, trade

November 13, 2010 | Comments Closed