Households' Preferences and Exchange Rate Overshooting

Christian Pierdzioch

International Economic Journal, 2007, vol. 21, issue 2, pages 297-316

Abstract: This paper uses a 'New-Open-Economy Macroeconomic' model to study the effect of a shock to Households' preferences 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. Results of numerical simulations of the model demonstrate that these features imply that, in an otherwise standard 'New-Open-Economy Macroeconomic' model, a shock to Households' preferences can give rise to an overshooting of the exchange rate.

Keywords: Preference shock; financial markets; catching-up with the Joneses; exchange rate overshooting (search for similar items in EconPapers)
Date: 2007
View citations in EconPapers

Downloads: (external link)
http://www.informaworld.com/openurl?genre=article& ... 40C6AD35DC6213A474B5 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:taf:intecj:v:21:y:2007:i:2:p:297-316

Ordering information: This journal article can be ordered from
http://www.tandf.co.uk/journals/subscription.html

Access Statistics for this article

International Economic Journal is edited by Jaymin Lee

More articles in International Economic Journal from Korean International Economic Association
Series data maintained by Christopher F. Baum ().