Influences of Demand Shocks on Exchange Rate Volatility: Imperfect Capital Mobility and Substitutability

Saziye Gazioglu

The Manchester School of Economic & Social Studies, 1996, vol. 64, issue 1, 79-95

Abstract: This paper distinguishes between the degree of capital mobility and asset substitutability in a Dornbusch-type model and investigates the effect of a unit demand shock to the exchange rate volatility by using a simulation approach. Raising the interest rate causes the exchange rate to appreciate over time after the first impact and has a contractionary effect on the economy. An aggregate demand shock leads to a depreciation in the first instance. Overshooting does not take place however due to low marginal propensities to consume. Copyright 1996 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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: https://EconPapers.repec.org/RePEc:bla:manch2:v:64:y:1996:i:1:p:79-95

Access Statistics for this article

More articles in The Manchester School of Economic & Social Studies from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().