Some pitfalls in open economy model building |
| |
Authors: | Jagdeep S. Bhandari |
| |
Affiliation: | Southern Illinois University, USA |
| |
Abstract: | This paper examines the nature of adjustment paths implied by a popular open macromodel embodying exchange rate expectations. It is shown that the ad hoc expectational scheme utilized in this kind of model may involve it in a rationality paradox if stability is to be preserved. Specifically, the implied exchange rate paths may be such that actual depreciation is accompanied by expected appreciation (and conversely) on a continuing basis. |
| |
Keywords: | |
本文献已被 ScienceDirect 等数据库收录! |