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Title: Explaining the exchange rate in the euro zone through non-tradable goods and the income effect
Author: Tariffi, Leonardo
Keywords: Equilibri (Economia)
Zona euro
Equilibrium (Economics)
Issue Date: Feb-2019
Publisher: International Journal of Development Research
Abstract: This paper shows those fundamental macroeconomics variables which explain the behaviour of the real exchange rate (RER) in the Euro Zone, with special emphasis in tariff rates. Diminishing tariffs on imports affect tradable and non-tradable sectors depending on substitution or income effects. When the substitution effect prevails, lower tariffs increase imports and the demand for foreign currency depreciates the euro. When the income effect is stronger, lower tariffs increase demand for goods in both tradable and non-tradable sectors. It boosts productivity and increases relative prices in the non-tradable sector.
Note: Reproducció del document publicat a:
It is part of: International Journal of Development Research, 2019, vol. 9, num. 2, p. 25753-25762
ISSN: 2230-9926
Appears in Collections:Articles publicats en revistes (Economia)

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