Schmid, MichaelMichaelSchmid2024-02-142024-02-1419820014-2921https://fis.uni-bamberg.de/handle/uniba/93501Labor market assumptions provide the crucial ingredients by which we distinguish between a Keynesian and a classical monetary trade model (monetary approach). Domestic and foreign goods are perfect substitutes and the law of one price holds. This minimal model should be appreciated as an income-cum-price specie flow mechanism although the long-run equilibrating process is not discussed in any detail. The paper stresses the interplay between demand pull and cost-push factors as a result of exchange rate changes.eng-330article