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VOLATILIDAD DE LOS TIPOS DE CAMBIO Y CONTRATOS TRASLAPADOS
Felipe G. Morandé
Cuadernos de Economía
Año 23, No. 69 (Agosto 1986), pp. 229-236
Stable URL: http://www.jstor.org/stable/23830436
Page Count: 8
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Under staggered wage setting, nominal exchange rate volatility results from monetary policies "too" accommodative to labor shocks. Volatility in the real rate of exchange, however, is exacerbated by government attempts to stabilize nominal prices. Consequently, Taylor's (1979) wage-output stability trade-off is extended to a nominal variable (wage, nominal exchange rate) vs. real variable (output, real rate of exchange) stability conflict.
Cuadernos de Economía © 1986 Instituto de Economia, Pontificia Universidad Catolica de Chile