%0 Journal Article
%T Test of an Inverted J-Shape Hypothesis between the Expected Real Exchange Rate and Real Output: The Case of Ireland
%A Yu Hsing
%J International Journal of Economic Sciences and Applied Research
%D 2010
%I Kavala Institute of Technology
%X Applying an open-economy macroeconomic model, incorporating the monetary policyreaction function and uncovering interest parity, this paper finds that the expected realexchange rate and real output exhibit an inverted J-shape relationship, suggesting thatexpected real depreciation increases real output during 1999.Q2-2001.Q3 whereas expectedreal appreciation raises output during 2001.Q4-2009.Q1. Other findings show that a higherreal financial stock price, a higher world real interest rate, or a lower expected inflationrate would increase real output. Fiscal prudence may be needed as the coefficient of thegovernment borrowing/GDP ratio is insignificant at the 10% level.
%K Expected Real Depreciation or Appreciation
%K Monetary Policy Reaction Function
%K Fiscal Policy
%K Financial Stock Price
%K Uncovered Interest Parity
%U http://www.ijesar.org/docs/volume3_issue1/j-shape_hypothesis.pdf