Foreign Indebtedness, Inflation and Exchange Rate Overshooting

  • Martin Zagler


Why are exchange rates more volatile than the nominal price level? Does the foreign debt increase or decline with national income? This chapter intends to give a theoretical answer to these two questions of international and monetary economic theory. The model setup in which these questions are treated is a standard representative agent utilitarian model, allowing for long-run growth due to constant returns to scale with respect to reproducible factors.


Exchange Rate Interest Rate Monetary Policy Capital Stock Real Exchange Rate 
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Copyright information

© Martin Zagler 1999

Authors and Affiliations

  • Martin Zagler
    • 1
  1. 1.Vienna University of Economics & BAViennaAustria

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