This paper investigates the role of money illusion on exchange rate dynamics in a small open economy. We find that whether the exchange rate overshoots in response to a monetary shock is not depend on the parameters such as the consumption elasticity of money demand and the degree of openness...

This paper uses New Open Economy Macroeconomics with micro-foundation as an analytical framework integrates the characteristics of imperfect competition market and anti-dumping behavior into the two country (home country and foreign country) model. The goal is to discuss the dynamic effect on...