Exchange rate overshooting and path-dependence in international trade

被引:5
作者
Borgersen, Trond-Arne [1 ]
Goecke, Matthias [1 ]
机构
[1] Univ Giessen, D-35394 Giessen, Germany
关键词
exchange rates; Dombusch model; hysteresis; foreign trade; PPP;
D O I
10.1017/S1365100507060117
中图分类号
F [经济];
学科分类号
02 ;
摘要
This paper integrates a traditional Dombusch overshooting model with a macro-economic model of hysteresis in foreign trade. We apply an approach which allows an aggregation of heterogeneous agents and which results in a continuous macroeconomic hysteresis-loop. In our model, short-run exchange rate overshooting generates a persistent current account effect, which feeds back into the exchange rate process and ultimately results in changes of the long-run equilibrium exchange rate. Monetary shocks can lead to hysteresis in both foreign trade and exchange rate processes, invalidating the long-run neutrality of money hypothesis and the purchasing power parity assumption of the conventional overshootin-model.
引用
收藏
页码:295 / 317
页数:23
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