The article explores how changes in productivity in one country can affect monetary policy and exchange rates in another country. By using a model that considers factors like price stickiness and competition, the researchers show that when one country becomes more productive than another, it can lead to lower prices for foreign goods and reduced output domestically. In response to this, the central bank should lower interest rates to stimulate economic activity. The study finds that productivity shocks can cause the exchange rate to decrease when countries are closely connected through trade.