Does the exchange rate regime influence the relationship between the output gap and the current account?

APPLIED ECONOMICS, pp. 1955-1960, 2007.

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Abstract:

Estimates of the output gap are useful for identifying the sustainable level of noninflationary output growth in countries with a flexible exchange rate regime. For nations with a fixed exchange rate, however, domestic prices are inexorably linked to the prices of its main trading partners and are unlikely to bear little relation to the o...More

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