14.02 Principles of Macroeconomics Problem Set 5 Solutions Spring 2003
... In order to maintain the exchange rate, the central bank has to sell foreign currency for domestic currency. However, the amount of foreign currency the central bank has in reserve is limited, so that it might be forced to devalue once it runs out of the foreign currency reserves. m) The US trade de ...
... In order to maintain the exchange rate, the central bank has to sell foreign currency for domestic currency. However, the amount of foreign currency the central bank has in reserve is limited, so that it might be forced to devalue once it runs out of the foreign currency reserves. m) The US trade de ...
Will the Renminbi replace the US Dollar as the world currency?
... affect the competitiveness of its export sector and economic growth. China’s Trilemma- In 1960, Noble prize winner Robert Mundell inferred that a country at one time can’t have an open capital account, along with control over interest rates and currency. For a country like China which is having a fi ...
... affect the competitiveness of its export sector and economic growth. China’s Trilemma- In 1960, Noble prize winner Robert Mundell inferred that a country at one time can’t have an open capital account, along with control over interest rates and currency. For a country like China which is having a fi ...
Appendices. - Harvard University
... 3) An increase in nontraded goods prices relative to internationally traded goods ...
... 3) An increase in nontraded goods prices relative to internationally traded goods ...
Living With the IMF.indd
... For 2010, our expectation is for higher inflation spurred by 1) recent tax measures by the Government and 2) continued increase in commodity prices on the international market. New taxes on electricity usage and higher taxes on cigarettes came into effect on January 1, 2010. Still, one of the main t ...
... For 2010, our expectation is for higher inflation spurred by 1) recent tax measures by the Government and 2) continued increase in commodity prices on the international market. New taxes on electricity usage and higher taxes on cigarettes came into effect on January 1, 2010. Still, one of the main t ...
Chapter 5: Monetary and financial stability policies
... of standing facilities at any time and on their own initiative. The facilities offered by the Central Bank are deposits and overnight loans against acceptable collateral. Interest on overnight loans forms the ceiling of the Central Bank’s interest rate corridor, while the current account deposit rat ...
... of standing facilities at any time and on their own initiative. The facilities offered by the Central Bank are deposits and overnight loans against acceptable collateral. Interest on overnight loans forms the ceiling of the Central Bank’s interest rate corridor, while the current account deposit rat ...
Michel, IPE, CPE, crisis
... Overview: in 1960s/70s, countries like Argentina, Brazil, and Mexico borrowed huge sums of money from international creditors for industrialization (especially infrastructure); public loans were typically through the World Bank or private banks that had an influx of funds from oil-rich countries (af ...
... Overview: in 1960s/70s, countries like Argentina, Brazil, and Mexico borrowed huge sums of money from international creditors for industrialization (especially infrastructure); public loans were typically through the World Bank or private banks that had an influx of funds from oil-rich countries (af ...
430Chap004
... Policies seek to promote full employment, economic growth, price stability, and a sustainable pattern of international trade ...
... Policies seek to promote full employment, economic growth, price stability, and a sustainable pattern of international trade ...
The Collapse of the Bretton Woods Fixed Exchange Rate System
... stock, but there were no other major acquisitions of gold by other countries. These drains drove the United States almost to the limit of its willingness to intervene in the gold markets. Political problems broke out in France shortly after the advent of the two-tiered system, and this provided the ...
... stock, but there were no other major acquisitions of gold by other countries. These drains drove the United States almost to the limit of its willingness to intervene in the gold markets. Political problems broke out in France shortly after the advent of the two-tiered system, and this provided the ...
Econ 371: Answer Key to Problem Set 4 (Chapter 16-17)
... ANSWER: Yes, the effect depends on flexibility of exchange rate. Figures 2.A and 2.B illustrate the case of temporary, and permanent fiscal expansion, respectively. Point 1 is the initial condition, and Point 2 is equilibrium with flexible exchange rate. Point 3 is equilibrium with fixed exchange ra ...
... ANSWER: Yes, the effect depends on flexibility of exchange rate. Figures 2.A and 2.B illustrate the case of temporary, and permanent fiscal expansion, respectively. Point 1 is the initial condition, and Point 2 is equilibrium with flexible exchange rate. Point 3 is equilibrium with fixed exchange ra ...
Why is the Dollar So High? Martin Feldstein
... an average rate that exceeds the interest differential between US and foreign interest rates should prefer to hold foreign bonds. That portfolio shift should occur until the dollar reaches a level at which further falls are no larger than the prevailing interest difference. The difference between d ...
... an average rate that exceeds the interest differential between US and foreign interest rates should prefer to hold foreign bonds. That portfolio shift should occur until the dollar reaches a level at which further falls are no larger than the prevailing interest difference. The difference between d ...
The impact of a strengthening Pound on UK
... What could the future hold? While forecasting exchange rate movements can be a risky business, many forecasters believe that the Pound is likely to strengthen further in the coming months, at least against the Euro. This is because the latest data released by the Office for National Statistics (ONS) ...
... What could the future hold? While forecasting exchange rate movements can be a risky business, many forecasters believe that the Pound is likely to strengthen further in the coming months, at least against the Euro. This is because the latest data released by the Office for National Statistics (ONS) ...
HOW TO SAVE THE EURO AND THE EUROPEAN UNION?
... But gold and other precious metals have left the sphere of money circulation a long time ago for objective reasons (which are commonly known for specialists and are not described here). Nowadays money is issued into economy only by the national banks of states, as well as ECB and FRS (all of them he ...
... But gold and other precious metals have left the sphere of money circulation a long time ago for objective reasons (which are commonly known for specialists and are not described here). Nowadays money is issued into economy only by the national banks of states, as well as ECB and FRS (all of them he ...
MONETARY REFORM THE CASE GOLD Convertibility, Monetary Overhang,
... therefore likely to be exaggerated. When it became known that the East German mark would be exchanged at a favorable rate with the West German mark, the so-called “free market” rate naturally went way up. Something similar briefly happened in Russia in early 1992, as the ruble went up on rumors that ...
... therefore likely to be exaggerated. When it became known that the East German mark would be exchanged at a favorable rate with the West German mark, the so-called “free market” rate naturally went way up. Something similar briefly happened in Russia in early 1992, as the ruble went up on rumors that ...
Week 8: Lecture 7
... Characteristics of the Foreign Exchange Market • The Forex Market does not exist physically – there is no location. It is a framework in which participants banks, brokers and foreign exchange dealers (mostly banks) are connected by computers, telephones and telex (SWIFT) and operates in most financ ...
... Characteristics of the Foreign Exchange Market • The Forex Market does not exist physically – there is no location. It is a framework in which participants banks, brokers and foreign exchange dealers (mostly banks) are connected by computers, telephones and telex (SWIFT) and operates in most financ ...
Exchange rates in PWT 8.0
... Exchange rates, in national currency relative to the US dollar, play a role in PWT mostly to normalize PPPs. By dividing PPPs by the exchange rate, we get a measure of the rel ...
... Exchange rates, in national currency relative to the US dollar, play a role in PWT mostly to normalize PPPs. By dividing PPPs by the exchange rate, we get a measure of the rel ...
Document
... counterparts. By the 2000s, though, competitiveness increased. Why? • Part of the answer can be found in exchange rates. In the 1980s, the dollar was strong, and US goods were expensive to foreign buyers. • By the 1990s and 2000s, the dollar weakened, so American goods became cheaper and American bu ...
... counterparts. By the 2000s, though, competitiveness increased. Why? • Part of the answer can be found in exchange rates. In the 1980s, the dollar was strong, and US goods were expensive to foreign buyers. • By the 1990s and 2000s, the dollar weakened, so American goods became cheaper and American bu ...
How Far Can Domestic Credit Growth Explain Speculative Attacks
... 1970 to April 1995. They find that the crisis probabilities generated by this model for the period between May 1995 and December 1996 are statistically significant predictors of actual crisis occurrence over the following 24 months. They discover that the probability of a currency crisis increases w ...
... 1970 to April 1995. They find that the crisis probabilities generated by this model for the period between May 1995 and December 1996 are statistically significant predictors of actual crisis occurrence over the following 24 months. They discover that the probability of a currency crisis increases w ...
Few Selected Questions
... increase as Alcatel demands dollars to pay for the new stock issue. The future value of the dollar should decline as dividend payments are sent to Alcatel and other Alcatel equipment and parts are imported. However, the value of the dollar in the future could increase if expanded MCI output substitu ...
... increase as Alcatel demands dollars to pay for the new stock issue. The future value of the dollar should decline as dividend payments are sent to Alcatel and other Alcatel equipment and parts are imported. However, the value of the dollar in the future could increase if expanded MCI output substitu ...
Chater 29 Open economy macroeconomics
... role – international considerations are especially important for open economies like the UK, Germany or the Netherlands ...
... role – international considerations are especially important for open economies like the UK, Germany or the Netherlands ...
3. International Trade BOP ER
... their cost of production reduced. • An appreciation can put downward pressure on inflation • A developing country would like encourage FDI. FDI will cause a demand for a currency and cause an appreciation which would be good for a developing country who wishes to import ...
... their cost of production reduced. • An appreciation can put downward pressure on inflation • A developing country would like encourage FDI. FDI will cause a demand for a currency and cause an appreciation which would be good for a developing country who wishes to import ...
IOSR Journal of Economics and Finance (IOSR-JEF)
... Source:Alan Heston, Robert Summers and Bettina Aten, Penn World Table Version 7.0, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, May 2011. Hyperinflation, which rapidly destroys a currency’s value, is fundamentally a monetary phenomenon. Dep ...
... Source:Alan Heston, Robert Summers and Bettina Aten, Penn World Table Version 7.0, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, May 2011. Hyperinflation, which rapidly destroys a currency’s value, is fundamentally a monetary phenomenon. Dep ...
Chapter 7 presentation.
... Monetary Neutrality in the long run In the long run, a one percent increase in the money supply is matched by the same one percent increase in the price level But in the short run, price level cannot increase immediately. Prices are “sticky”. So, M/P (real money supply) increases. This causes dome ...
... Monetary Neutrality in the long run In the long run, a one percent increase in the money supply is matched by the same one percent increase in the price level But in the short run, price level cannot increase immediately. Prices are “sticky”. So, M/P (real money supply) increases. This causes dome ...