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Some Notes on Overshooting

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  • Homburg, Stefan

Abstract

Using two examples we have shown that large fluctuations in real exchange rates cannot normally be attributed to "overshooting" in the Dornbusch sense. We proposed to use the interest differential between to countries as a direct and reliable measure of the extend of overshooting. Observing that differential immediately reveals that the past appreciation of the dollar against the mark has hardly anything to do with overshooting.

Suggested Citation

  • Homburg, Stefan, 1989. "Some Notes on Overshooting," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 109(3), pages 443-447.
    • Handle: RePEc:zbw:espost:92896
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    References listed on IDEAS

    as
    1. Driskill, Robert A, 1981. "Exchange-Rate Dynamics: An Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 357-371, April.
    2. Stockman, Alan C, 1980. "A Theory of Exchange Rate Determination," Journal of Political Economy, University of Chicago Press, vol. 88(4), pages 673-698, August.
    3. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
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    • F31 - International Economics - - International Finance - - - Foreign Exchange

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