01806cas a2200241 a 4500 AALejournalIMF007336 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451928525 1018-5941 BD-DhAAL BD-DhAAL Kollman, Robert. The Exchange Rate in a Dynamic-Optimizing Current Account Model with Nominal Rigidities : A Quantitative Investigation / Robert Kollman. Washington, D.C. : International Monetary Fund, 1997. 1 online resource (51 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper studies dynamic-optimizing model of a semi-small open economy with sticky nominal prices and wages. The model exhibits exchange rate overshooting in response to money supply shocks. The predicted variability of nominal and real exchange rates is roughly consistent with that of G-7 effective exchange rates during the post-Bretton Woods era. The model predicts that a positive domestic money supply shock lowers the domestic nominal interest rate, that it raises output and that it leads to a nominal and real depreciation of the country's currency. Increases in domestic labor productivity and in the world interest rate too are predicted to induce a nominal and real exchange rate depreciation. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1997/007 Full text available on IMF http://elibrary.imf.org/view/journals/001/1997/007/001.1997.issue-007-en.xml IMF e-Library