Resource title

Productivity Shocks and Delayed Exchange-Rate Overshooting

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Resource description

This paper uses a ?new open economy macroeconomics? model to study the effect of a productivity shock on exchange rate dynamics. The special features of the model are that households? preferences exhibit a ?catching up with the Joneses? effect and that international financial markets are imperfectly integrated. Numerical simulations of the model are used to demonstrate that these features imply that, in an otherwise standard ?new open economy macroeconomics? model, a productivity shock can give rise to a delayed overshooting of the exchange rate.

Resource author

Christian Pierdzioch

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/17743

Resource license

Adapt according to the presented license agreement and reference the original author.