Overshooting
The overshooting model or the exchange rate overshooting hypothesis, first developed by economist Rudi Dornbusch, is a theoretical explanation for high levels of exchange rate volatility. The key features of the model include the assumptions that goods' prices are sticky, or slow to change, in the short run, while the prices of currencies are flexible, that arbitrage in asset markets holds, via the uncovered interest parity equation, and that expectations of exchange rate changes are "consistent" — that is, rational. The most important insight of the model is that adjustment lags in some parts of the economy can induce compensating volatility in others; specifically, when an exogenous variable changes, the short-run effect on the exchange rate can be greater than the long-run effect, so that in the short run the exchange rate overshoots its new equilibrium long-run value.
Dornbusch developed this model back when many economists held the view that ideal markets should reach equilibrium and stay there. Volatility in a market, from this perspective, could only be a consequence of imperfect or asymmetric information or adjustment obstacles in that market. Rejecting this view, Dornbusch argued that volatility is in fact a far more fundamental property than that.
According to the model, when a change in monetary policy occurs (e.g. an unanticipated permanent increase in the money supply), the market will adjust to a new equilibrium between prices and quantities. Initially, because of the "stickiness" of prices of goods, the new short run equilibrium level will first be achieved through shifts in financial market prices. Then, gradually, as prices of goods "unstick" and shift to the new equilibrium, the foreign exchange market continuously reprices, approaching its new long-term equilibrium level. Only after this process has run its course will a new long-run equilibrium be attained in the domestic money market, the currency exchange market, and the goods market.
As a result, the foreign exchange market will initially overreact to a monetary change, achieving a new short run equilibrium. Over time, goods prices will eventually respond, allowing the foreign exchange market to dissipate its overreaction, and the economy to reach the new long run equilibrium in all markets.

This is an excerpt from the article Overshooting from the Wikipedia free encyclopedia. A list of authors is available at Wikipedia.
The article Overshooting at en.wikipedia.org was accessed 43 times in the last 30 days. (as of: 11/07/2013)
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Overshooting model - Wikipedia, the free encyclopedia
The Overshooting model or the exchange rate Overshooting hypothesis, first developed by economist Rudi Dornbusch, is a theoretical explanation for high levels ...
en.wikipedia.org/wiki/Overshooting_model
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Overshooting Definition | Investopedia
A phenomenon in economics used to explain why exchange rates are more volatile than would be expected. Some economists had argued that volatility was  ...
www.investopedia.com/terms/o/overshooting.asp
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Dornbusch's Overshooting Model After…
Dornbusch's Overshooting Model After Twenty-Five Years Second Annual IMF Research Conference Mundell-Fleming Lecture Kenneth Rogoff 1 Economic Counselor and Director ...
www.imf.org/external/np/speeches/2001/112901.htm
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Overshoot (signal) - Wikipedia, the free encyclopedia
In signal processing, control theory, electronics, and mathematics, overshoot is when a signal or function exceeds its target. It arises especially in the step ...
en.wikipedia.org/wiki/Overshoot_(signal)
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overshooting - The Free Dictionary
v. o·ver·shot (-sh t ), o·ver·shoot·ing, o·ver·shoots. v.tr. 1. To shoot or pass over or beyond. 2. To miss by or as if by shooting, hitting, or propelling something too ...
www.thefreedictionary.com/overshooting
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overshoot - definition of overshoot by the Free Online Dictionary ...
v. o·ver·shot (-sh t ), o·ver·shoot·ing, o·ver·shoots. v.tr. 1. To shoot or pass over or beyond. 2. To miss by or as if by shooting, hitting, or propelling something too ...
www.thefreedictionary.com/overshoot
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Earth Overshoot Day - Global Footprint Network
Aug 20, 2013 ... August 20 is Earth Overshoot Day 2013, marking the date when humanity exhausted nature's budget for the year. We are now operating in ...
www.footprintnetwork.org/en/index.php/gfn/page/earth_overshoot_day/
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Exchange rate overshooting and the costs of floating - Federal ...
rate Overshooting (devaluation in excess of the long-run equilibrium level) and large ... capital inflows into the country and a sharp short-run Overshooting of the  ...
www.frbsf.org/economic-research/files/wp05-07bk.pdf
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Exchange Rate Overshooting
Topic 4. Exchange Rate Overshooting. We have just finished analyzing the forces determining movements of the real exchange rate under full-employment ...
www.economics.utoronto.ca/jfloyd/modules/xrov.html
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Overshooting - Dictionary Definition of Overshooting - Economics
Overshooting Defined - A Dictionary Definition of Overshooting.
economics.about.com/cs/economicsglossary/g/overshooting.htm
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Overshooting in science
[PDF]The Fragility of Overshooting - UCSB Economics - University of ...
University of California. Santa Barbara, California 93106. Using VAR, a large literature claims to find evidence of some form of Dornbusch Overshooting. But the ...
Hofstra University Student Killed by Police: Officer 'Inconsolable ...
May 20, 2013 ... The officer who fatally shot Hofstra University student Andrea ... Hofstra University Student Killed by Police: Officer 'Inconsolable' Over Shooting.
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Overshooting. HIROYA AKIBA*. Waseda University. This paper investigates the effects of the rebalancing effect (the exchange rate sensitivity of the demand ...
The Timing and Magnitude of Exchange Rate Overshooting
The estimated magnitude and timing of the Overshooting, however, varies across ... (Johns Hopkins University, Department of International Economics (SAIS)).
[PDF]Exchange rate overshooting and the costs of floating - Federal ...
New York University, NBER and CEPR. May 2005 ... rate Overshooting ( devaluation in excess of the long-run equilibrium level) and large output contrac- tions.
[PDF]Exchange rate overshooting and the costs of floating1 - Federal ...
rate Overshooting (devaluation in excess of the long run equilibrium level) and large ... Princeton University, the 2002 NBER IFM Spring Meeeting and the 2004  ...
Oikos University nursing director distraught over shooting massacre ...
Apr 5, 2012 ... Oikos University nursing school director Ellen Cervellon was distraught after learning about Monday's shooting.
[PDF]paper. - Suffolk University
This paper tests the hypothesis that Overshooting simply reflects the ... Corresponding Author, Department of Economics, Korea University, 5-1 Ka, Anam-Dong, ...
Ala. College Asks Court To Toss Suit Over Shooting | University ...
Jan 15, 2013 ... The University of South Alabama and its police chief want a judge to dismiss a lawsuit filed by the parents of a nude student who was shot to ...
University of South Alabama asks court to toss suit over shooting of ...
Jan 14, 2013 ... The University of South Alabama and its police chief want a judge to dismiss a lawsuit filed by the parents of a nude student who was shot to ...
Books on the term Overshooting
Overshooting: Webster's Quotations, Facts and Phrases
Overshooting: Webster's Quotations, Facts and Phrases
2009
Familiar Quotations Overshooting – "Misses"How can I miss you if you won't go away?–AnonymousThe Miss Universe pageant is fixed. All the winners are from Earth.–AnonymousWhy are there so many people who never miss an opportunity to miss an opportunity?–AnonymousShoot for the moon. Even if you miss it you will land among the stars.–Le...
Dornbusch's Overshooting Model After Twenty-Five Years
Dornbusch's Overshooting Model After Twenty-Five Years
Kenneth Rogoff, 2002
This essay provides a simple overview of the model as well as some empirics, not only on exchange rates but on measures of the paper’s influence.
Overshooting and Dollarization in the Democratic Republic of ...
Overshooting and Dollarization in the Democratic Republic of ...
Mr. Philippe Beaugrand, 2003
The paper develops an interpretation of volatile exchange rate movements in a dollarized economy with very high rates of inflation.
Dornbusch's Overshooting Model After Twenty-Five Years (EPub)
Dornbusch's Overshooting Model After Twenty-Five Years (EPub)
Mr. Kenneth Rogoff, 2002
This essay provides a simple overview of the model as well as some empirics, not only on exchange rates but on measures of the paper’s influence.
Asian Financial crises: Origins, implications and solutions
Asian Financial crises: Origins, implications and solutions
2001
IMF economists work closely with member countries on a variety of issues. Their unique perspective on country experiences and best practices on global macroeconomic issues are often shared in the form of books on diverse topics such as cross-country comparisons, capacity building, macroeconomic policy, financial integration, and globalization.
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Overshooting
The Jewish Press » » Israel, Lebanese, Hezbollah, Avoid Confrontation over Shooting
No one is interested in opening a second front, right next door to the Syrian civil war.
www.jewishpress.com/news/breaking-news/israel-lebanese-hezbollah-avoid-confrontation-over-shooting/2013/12/16/
Man arrested over shooting of police officer in Leeds | UK | News | Daily Express
A MANHUNT launched after the shooting of a police officer in the early hours of this morning has ended with the arrest of a 37 year old man.
www.express.co.uk/news/uk/446721/Man-arrested-over-shooting-of-police-officer-in-Leeds
Bar owner indicted over shooting death of country singer Wayne Mills - FOX16.com
The Nashville, Tennessee bar owner who allegedly shot and killed country singer Wayne Mills during an argument last month has been charged with second-degree murder.
www.fox16.com/story/bar-owner-indicted-over-shooting-death-of-country/d/story/IjXfgN8FRkajpG3yLu-Vfw
eFXnews : EUR/USD: Risk Of Overshooting But We Stay Short - Morgan Stanley
Morgan Sanely admits that the risk of a near-term EURUSD overshoot to the upside has increased going into the year-end, but sees that as a temporary move before the gradual decline of the pair throughout next year."EUR is already diverging from fundamental and market-based indicators, suggesting increased medium-term vulnerability. Once the cu
www.efxnews.com/story/22066/eurusd-risk-overshooting-we-stay-short-morgan-stanley
Massive Protest Set Over Shooting Of 13-Year-Old By Sonoma Deputy « CBS San Francisco
Hundreds of people are expected to march through downtown Santa Rosa Tuesday afternoon to protest the fatal shooting of a 13-year-old Andy Lopez by Sonoma County sheriff's Deputy Erick Gelhaus last week.
sanfrancisco.cbslocal.com/2013/10/29/massive-protest-set-over-shooting-of-13-year-old-by-sonoma-deputy/
McNally 'cautioned over shooting threat' - UTV Live News
A court has heard that the man who murdered Bellaghy teenager Lauren O'Neill, had previously been cautioned for threatening to shoot a man.
www.u.tv/News/McNally-cautioned-over-shooting-threat/89e8c777-6e7d-474c-b188-f0911812e23f
Wayne Mills | Bar Owner Indicted Over Shooting Death Of Wayne Mills | Contactmusic.com
The Nashville, Tennessee bar owner who allegedly shot and killed country singer Wayne Mills during an argument last month (Nov13) has been charged with second-degree murder.Christopher Ferrell reportedly told police he acted in self-defence after a heated confrontation with the...
www.contactmusic.com/story/bar-owner-indicted-over-shooting-death-of-wayne-mills_3987176
Why Is An Unarmed Man Being Charged With Assault Over Shooting? | ReaganCoalition.com
reagancoalition.com/articles/2013/why-is-an-unarmed-man-being-charged-with-assault-over-shooting.html
Family Sues LAPD Over Shooting Of Mentally Ill Baldwin Hills Woman « CBS Los Angeles
Attorneys were set to announce a lawsuit against the Los Angeles Police Department for shooting a mentally ill 18-year-old woman in 2011 after her mother called authorities to request help.
losangeles.cbslocal.com/2013/10/29/family-sues-lapd-over-shooting-of-mentally-ill-baldwin-hills-woman/
South Carolina Parents Timothy Sanders & April Dixon Charged over Shooting Death of 21-Month-Old Madison Dolford | Moral Low Ground
Timothy O'Neil Sanders and April Dixon of Hartsville, South Carolina have been arrested in connection with the shooting death of their daughter, Madison Dolford.
morallowground.com/2013/12/05/south-carolina-parents-timothy-sanders-april-dixon-charged-over-shooting-death-of-21-month-old-madison-dolford/
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