Could there be overshooting of the exchange rate

Reference no: EM131236759

(a) Could there be “overshooting” of the exchange rate in the Dornbusch model if goods markets adjusted as rapidly as asset markets? Why or why not?

(b) What would be the analog to the general phenomenon of “overshooting” in a situation of fixed exchange rates? Explain.

Reference no: EM131236759

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