monetary shocks. First, we expand the theoretical specification of the overshooting hypothesis by generalizing Dornbusch …'s model to include a third sector (i.e., agricultural prices). Second, we employ Johansen's cointegration test along with a …

policy shock, and that there is no delay in the overshooting of the U.S. Dollar. Furthermore, there is no persistent … overshooting of the exchange rate as well as persistent deviations from uncovered interest parity. We specify an empirical model … to capture simultaneous multi-country adjustments to shocks. -- monetary policy ; exchange rate overshooting ; forward …

In this paper we use data from Mexico to identify Dornbusch's (1976) exchange rate overshooting hypothesis. We specify … variables to a monetary policy shock. The long-run restrictions embedded in the model are themselves identified, estimated, and …