Kempa, Bernd; Wilde, Wolfram - In: Economic Modelling 28 (2011) 6, pp. 2622-2627
This paper investigates the sources of exchange rate fluctuations when monetary policy follows a Taylor rule interest … rate reaction function. We first present a simple dynamic exchange rate model with Taylor rule fundamentals which is … triangular in the long-run impacts of shocks to the output market, the interest rate differential, and the Taylor rule. We then …