Rational Expectations in a Multilateral Macro-Model



The object of this paper is to investigate the effects of fiscal and monetary shocks on the exchange rate within a world macroeconomic model. The model is macroeconomic in the sense that it has no ‘supply-side’ at this stage; the equilibrium (or ‘natural’) values of output, real interest rates, real exchange rates, etc., are all taken as exogenous.


Exchange Rate Interest Rate Current Account Real Exchange Rate Real Wage 
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© Paul De Grauwe and Theo Peeters 1983

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