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2019-02

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cc-by (c) Tariffi, Leonardo, 2019
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/133009

Explaining the exchange rate in the euro zone through non-tradable goods and the income effect

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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.

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Equilibri (Economia), Canvi, Zona euro, Impostos

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Equilibrium (Economics), Exchange, Eurozone, Taxation

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Articles publicats en revistes (Economia)

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TARIFFI, Leonardo. Explaining the exchange rate in the euro zone through non-tradable goods and the income effect. International Journal of Development Research. 2019. Vol. 9, num. 2, pags. 25753-25762. ISSN 2230-9926. [consulted: 16 of June of 2026]. Available at: https://hdl.handle.net/2445/133009

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