The deviations of inflation from target in the two versions of the model are very similar and modest, since the central bank policy objective is the same in both models. As expected, the central bank cuts interest rates in response to the shock somewhat more aggressively in the version of the model with higher cross-border integration.
In contrast, the reaction of the real exchange rate to the shock is much greater in the high-integration version of the model, and the domestic real economic downturn much deeper and more prolonged.