Exchange Rate Determination in the Dornbusch Model

Imad A Moosa and Razzaque H Bhatti
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Imad A Moosa: Monash University, Australia
Razzaque H Bhatti: Gulf University for Science and Technology, Kuwait

Chapter 5 in The Theory and Empirics of Exchange Rates, 2009, pp 149-185 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThe following sections are included:IntroductionFundamental Propositions of the Dornbusch ModelIn Defense of the Mundell–Fleming ModelA Restatement of the Mundell–Fleming ModelExchange Rate Expectations and Adjustment to Monetary ExpansionFailure of the Marshall–Lerner ConditionExchange Rate Overshooting and Aggregate SpendingShort- and Long-Run Views of Exchange RatesExchange Rate Determination in the Short RunExchange Rate Determination in the Long RunInteraction Between Goods and Asset MarketsThe Overshooting Model of Exchange RatesThe Structure of the Dornbusch ModelAdjustment to Monetary ExpansionThe Reduced Form Equation of the Equilibrium Exchange RateRecapitulation

Keywords: Models of Exchange Rate Determination; Balance of Payments; Macroeconomic Approach to Exchange Rates; Microstructure Approach to Exchange Rates; Mundell-Fleming Model; Flexible-Price Monetary Model of Exchange Rates; Portfolio Balance Model; Currency Substitution Model (search for similar items in EconPapers)
JEL-codes: I10 (search for similar items in EconPapers)
Date: 2009
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