![Exam essay 1 - Explain what causes the nominal exchange rate to overshoot in the overshooting model. - Studocu Exam essay 1 - Explain what causes the nominal exchange rate to overshoot in the overshooting model. - Studocu](https://d20ohkaloyme4g.cloudfront.net/img/document_thumbnails/a31308c4c754a6d2898556a25929d8b0/thumb_1200_1698.png)
Exam essay 1 - Explain what causes the nominal exchange rate to overshoot in the overshooting model. - Studocu
![I. Assume that the economy is initially in its long-run equilibrium before each event hits the economy, with inflation \pi = \bar{\pi} = \pi^{*} and output Y = \bar{Y} = Y^{*}. The I. Assume that the economy is initially in its long-run equilibrium before each event hits the economy, with inflation \pi = \bar{\pi} = \pi^{*} and output Y = \bar{Y} = Y^{*}. The](https://homework.study.com/cimages/multimages/16/1graph_17996607437862934266.png)
I. Assume that the economy is initially in its long-run equilibrium before each event hits the economy, with inflation \pi = \bar{\pi} = \pi^{*} and output Y = \bar{Y} = Y^{*}. The
![Determinants of the Long-Run Equilibrium Real Exchange Rate : An Analytical Model | Semantic Scholar Determinants of the Long-Run Equilibrium Real Exchange Rate : An Analytical Model | Semantic Scholar](https://d3i71xaburhd42.cloudfront.net/ef2255a177a9bf7ff9ac579a6f9a8e888baddb71/23-Figure6.5-1.png)