Understanding the Effect of Productivity Changes on International Relative Prices: The Role of News Shocks - Dallas Fed

  • Deokwoo Nam, Jian Wang, +4 authors Akiko Tarada-Hagiwara
  • Published 2010

Abstract

Abstract The terms of trade and the real exchange rate of the US appreciate when the US labor productivity increases relative to the rest of the world. This finding is at odds with predictions from standard international macroeconomic models. In this paper, we find that incorporating news shocks to total factor productivity (TFP) in an otherwise standard… (More)

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