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Abstract

This paper studies a dynamic-optimizing model of a semi-small open economy with sticky nominal prices and wages. The model exhibits exchange rate overshooting in response to money supply shocks. The predicted variability of nominal and real exchange rates is roughly consistent with that of G7 effective exchange rates during the post-Bretton Woods era.

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Bibliographic Info

Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 9614.

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Length: 52 pages
Date of creation: 1996
Date of revision:
Handle: RePEc:mtl:montec:9614

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Related research

Keywords: BUSINESS CYCLES; EXCHANGE RATE; BALANCE OF PAYMENTS; FINANCIAL MARKET;

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Find related papers by JEL classification:

• E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
• E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
• F30 - International Economics - - International Finance - - - General
• F31 - International Economics - - International Finance - - - Foreign Exchange

References

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