Inflationary Expectations, Variable Output, and Exchange-Rate Dynamics

Autor:	Jay H. Levin
Rok vydání:	1996
Předmět:	media_common.quotation_subject Keynesian economics Depreciation Geography Planning and Development Monetary economics Development Interest rate Equilibrium level Variable (computer science) Exchange rate Interest rate parity Currency Economics media_common
Zdroj:	Review of International Economics. 4:40-53
ISSN:	1467-9396 0965-7576
DOI:	10.1111/j.1467-9396.1996.tb00082.x
Popis:	This paper develops a model of exchange-rate dynamics characterized by inflationary expectations held with perfect foresight, sticky wages, and sluggish output adjustment. In this framework monetary expansion initially lowers interest rates because of sluggish output and price adjustment but quite surprisingly produces exchange-rate overshooting or undershooting. Moreover, after its initial depreciation in the overshooting case, the domestic currency temporarily appreciates beyond its new long-run equilibrium level. In the undershooting case, the home currency temporarily appreciates away from its new long-run equilibrium level. Finally, the dynamic real exchange rate-real interest rate relationship at times becomes inverse.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::8a8d45eaecaa304f77cd654fe6aec307 https://doi.org/10.1111/j.1467-9396.1996.tb00082.x Zobrazit plný text záznamu Plný text