Long-Term Consequences of a Permanent Demand Shock in a Monetary Union
If a country within a monetary union experiences a permanent positive demand shock, the resulting real exchange rate appreciation will lead to a lasting decline in its international competitiveness. Consequently, its net exports will be permanently lower once the economy reaches a new equilibrium.
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Ch.7 Macroeconomic policy in the global economy - The Economy 2.0 Macroeconomics @ CORE Econ
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