Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/17743
Authors: 
Pierdzioch, Christian
Year of Publication: 
2004
Series/Report no.: 
Kiel Working Paper 1199
Abstract: 
This paper uses a 'new open economy macroeconomics' model to study the effect of a productivity shock on exchange rate dynamics. The special features of the model are that households' preferences exhibit a 'catching up with the Joneses' effect and that international financial markets are imperfectly integrated. Numerical simulations of the model are used to demonstrate that these features imply that, in an otherwise standard ?new open economy macroeconomics' model, a productivity shock can give rise to a delayed overshooting of the exchange rate.
Subjects: 
Productivity shock
Exchange rate overshooting
JEL: 
F31
F41
F32
Document Type: 
Working Paper

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