Marques, Luis B (2007): The Costs to Consumers of a Depreciated Conversion Rate to the Euro.
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This paper measures the welfare cost to consumers of the bloc of Central and Eastern European Countries (CEEC), plus Malta and Cyprus, of choosing a de- preciated conversion rate when joining the European Monetary Union. For this, I present and solve an appropriately calibrated small open economy model where a euro-denominated bond and the equity on a traded goods sector are traded internationally. I show that the cost of depreciating the domestic currency against the euro by 20%, at the time of joining the European Monetary Union, entails a cost of approximately 1.65% in terms of lost lifetime utility (measured in equivalent units of consumption).
|Item Type:||MPRA Paper|
|Original Title:||The Costs to Consumers of a Depreciated Conversion Rate to the Euro|
|Keywords:||trade effect, valuation effect, wealth effect, exchange rate|
|Subjects:||F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F47 - Forecasting and Simulation: Models and Applications
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||Luis B Marques|
|Date Deposited:||13. Nov 2007 00:46|
|Last Modified:||12. Feb 2013 11:58|
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