Abstract
This paper makes inquiries into the adjustment and evolution of the exchange rate towards its new long-run equilibrium level following a change in money supply. Joint and sequential effects of interest rate parities and sticky prices on the rise, from the short-term through to the long-run horizon, have been scrutinized. A pattern in exchange rate adjustments and movements has emerged that is featured by reverse movements of the exchange rate in the short-term, which is largely regulated by interest rate parities, prior to its eventual convergence to the new long-run equilibrium, which is confined to the working of PPP. Calibrations of the model with actual exchange rate data are performed in the study. Effects of recent quantitative easing exercises fit the featured pattern delicately well.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
