Exchange rates impact inflation differently across countries, study finds.
The article estimates how changes in policies affect output, prices, interest rates, and exchange rates among different countries. By using an econometric model, the researchers found that these linkages are complex and not always straightforward. For example, a decrease in exchange rate can increase GNP for Japan but decrease it for Germany and the U.K. The study also highlights the importance of understanding how price, interest rate, and exchange rate linkages impact countries' economies.