This article's focus is on the time adjustment paths of the exchange rate and prices in response to unanticipated 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...

In this article, I present a theoretical framework and derive an empirical model that relates import price risk to the allocation of an import across exporting sources (source diversification). A differential approach to expected utility theory and firm demand is used to derive a model...