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(DP 2014-14) Exchange-Rate Overshooting: An Analysis for Intermediate Macro

UPSE Discussion Papers

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Title (DP 2014-14) Exchange-Rate Overshooting: An Analysis for Intermediate Macro
 
Creator Natividad-Carlos, Fidelina B.
 
Subject undergraduate teaching; graduate teaching; exchange rates; exchange rate dynamics; sticky prices; interest parity; open economy macroeconomics; fiscal policy; monetary policy
 
Description While exchange rate dynamics is an important topic in open economy macroeconomics, the standard tool commonly used to introduce exchange rate dynamics - the Dornbusch (1976) seminal paper along with phase diagram - is not well-suited for undergraduate students as most of them do not have yet a background on dynamic macroeconomic analysis.This paper attempts to provide a graphical device – a panel IS*-LM* diagram – which can be used to teach intermediate macroeconomics students about Dornbusch’s idea of exchange rate dynamics. In addition, it also attempts to bridge the gap between undergraduate teaching and graduate teaching of exchange rate dynamics by showing the correspondence between the economy’s adjustment path in the IS*-LM* diagram and that in the phase diagram.JEL classification: A150, A230, F310, F410
 
Publisher UPSE Discussion Papers
 
Contributor —
 
Date 2014-10-24
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1468
 
Source UPSE Discussion Papers; 2014
 
Language eng
 
Relation http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1468/945