Cite JOURNAL ARTICLE
Auslandspreise und Inlandskonjunktur bei Wechselkursflexibilität
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 112 (1992), Iss. 1 : pp. 1–23
The underlying model, whose supply side is characterized by wage indexation and the incorporation of an imported intermediate good (raw material), leads to the following results: A rise in the price of imported raw materials (e.g. oil) causes a longrun increase of domestic prices, a decrease of production, and an indefinite reaction of the exchange rate. A rise in the price of imported final goods, however, causes a decrease of domestic prices, an increase of production, and a definite appreciation of the exchange rate with a short-run possibility of an undershooting. In both cases, the long-run effects on employment are equivocal.