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Figure 1. Overshooting, monotonic exchange rate behavior in the Dornbuschmodel (DBM) versus undershooting, damped cyclical behavior in the Murphymodel (MM), and in the extension of Dornbusch discussed below (EDBM).
Table 1: Equations of the Dornbusch Model
Table 2: Notation for Variables in the Dornbusch Model
Figure 2. Dynamics of main variables (other than the exchange rate) in DBM� �(unbroken lines) and in EDBM (broken lines) under an unanticipated, credible,permanent 1 percent monetary expansion
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