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- Title
Exchange Rate Hysteresis: The Effects of Overshooting and Short-Termism.
- Authors
McCausland, W David
- Abstract
The present paper addresses two questions. First, how does exchange rate overshooting affect hysteresis in trade and competitiveness? Second, how does ‘short-termism’ alter the magnitude of such hysteresis effects? The paper models the dynamic processes of hysteresis in trade and competitiveness in terms of the presence of discrete, asymmetric lump-sum costs of entry, in response to unanticipated foreign policy shocks. The paper produces some important new insights into the role of short run adjustment processes in understanding persistence effects in key macroeconomic indicators.
- Subjects
FOREIGN exchange rates; HYSTERESIS (Economics)
- Publication
Economic Record, 2002, Vol 78, Issue 240, p60
- ISSN
0013-0249
- Publication type
Article
- DOI
10.1111/1475-4932.00039