Dornbusch’s Overshooting Model After Twenty-Five Years

February 1, 2002

Preview Citation

Format: Chicago

Kenneth Rogoff. Dornbusch’s Overshooting Model After Twenty-Five Years, (USA: International Monetary Fund, 2002) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This Mundell Fleming lecture at the International Monetary Fund’s 2001 annual research conference marks the 25th anniversary of Rudiger Dornbusch’s masterpiece, “Expectations and Exchange Rate Dynamics,” a seminal contribution to both policy and research in the field of international finance. This essay provides a simple overview of the model as well as some empirics, not only on exchange rates but on measures of the paper’s influence. Last, but not least, I offer some personal reflections on how Dornbusch conveyed the ideas in his “overshooting model” to inspire a generation of students.

Subject: Demand for money, Exchange rates, Foreign exchange, Monetary base, Money, Prices, Rational expectations, Real exchange rates, Sticky prices

Keywords: Demand for money, Dornbusch model, Europe, Exchange rate, Exchange rates, Forward rate, International economics, Monetary base, Money demand, Overshooting, Overshooting paper, Rational expectations reformulation, Real exchange rates, Sticky prices, Thought experiment, Variant Dornbusch, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/039
Stock No:

WPIEA0392002
ISBN:

9781451845846
ISSN:

1018-5941

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