Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75071
Authors: 
König, Peter
Year of Publication: 
1986
Series/Report no.: 
Diskussionsbeiträge, Serie A: Volkswirtschaftliche Beiträge, Fakultät für Wirtschaftswissenschaften und Statistik, Universität Konstanz 219
Abstract: 
In the political discussion, exchange rates are often said to be overvalued or undervalued. This is due to the fact that exchange rates have to fulfill a (more than) dual role: they have to balance international goods markets and international capital markets. In general, economic models try to handle this problem by introducing short-term overshooting effects of the exchange rate induced by monetary disturbances. Yet, especially in estimating these models, a fixed relationship between asset markets and goods markets is assumed: the adjustment speed of the actual overshooting exchange rate to its long-run level is kept constant over time. In this paper, we introduce a time-varying index for capital market integration via expectation formation in the context of a monetary approach to the exchange rate with sticky prices.
Document Type: 
Working Paper

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