. Using a two-country stochastic dynamic general equilibrium withnominal price stickiness and local currency pricing, we will … show how the persistence ofpurchasing power parity deviations can be related to a monetary theory of these deviations …

contains a metric for currency, errors and error costs, and a currency threshold for attribute values. The decision modelis …

‘transactional processes’, where currencies areassessed and goods distributed or withheld accordingly. ‘Currencies’ are not … the objective of thetransaction. However, even where people have currency, transaction may beprevented by inaccessible … infrastructure (buildings, transport, communications,etc), or through failure to recognize currency. Both poverty (lack of capital …

currency. The long run return differential has been stable over the last 20 years, transitory structural breaks are only found … in times of currency turmoil. We suggest that the return anomaly may be due to an insurance premium against very rare …

effects. The nominal bilateral exchange rate tothe $US captures the value of the local currency (a higher value implies a … cheaper currency andattracts FDI). Changes in the real effective exchange rate index (REER) proxy for expected changes inthe … postponed (encouraged). The temporary component of bilateralexchange rates is a proxy for volatility of local currency, which …