Research output: Contribution to journal › Article › peer-review
Journal | Open Economies Review |
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Date | Published - Feb 2010 |
Issue number | 1 |
Volume | 21 |
Number of pages | 22 |
Pages (from-to) | 23-44 |
Original language | English |
We examine a two country model of the EU and the US. Each has a small sector of the labour and product markets in which there is wage/price rigidity, but otherwise enjoys flexible wages and prices with a one quarter information lag. Using a VAR to represent the data, we find the model as a whole is rejected. However it is accepted for real variables, output and the real exchange rate, suggesting mis-specification lies in monetary relationships. The model highlights a lack of spillovers between the US and the EU.
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