Imperfect Competition with Separating Exchange Markets

Wang, Fuhmei

doi:2002.17.3.474

The Journal of Economic Integration 2002 September;17(3) :474-501.
DOI: https://doi.org/10.11130/jei.2002.17.3.474

Imperfect Competition with Separating Exchange Markets

Fuhmei Wang,

National Cheng Kung University

ABSTRACT

Obstfeld and Rogoff (1995) endeavour to investigate the international welfare spillovers with monopolistic competition and sticky output prices, yet in a unified exchange rate system. This paper applies their framework to the regime of dual exchange markets, generating plenty of results of policies. The particular contribution of this paper to the welfare effects of country sizes on policy lies in the cases of numerical simulations. The discussions of spillover effects, the current account dynamics, and imperfect competition to the separating exchange markets fill in the gaps on the literature. Then it takes a further step on open economy macroeconomics. JEL Classifications (F32, F33, F41)

Keywords: Imperfect Competition | Dual Exchange Markets | Welfare Effects | Population Weights