Download CHAPTER 6. Fixed Prices: The Mundell – Fleming Model

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CHAPTER 6. Fixed Prices: The Mundell – Fleming Model
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The Setting
Equilibrium
Monetary Expansion With A Floating Exchange Rate
Fiscal Expansion With A Floating Exchange Rate
Monetary Expansion With A Fixed Exchange Rate
Fiscal Expansion With A Fixed Exchange Rate
The Monetary And The Mundell-Fleming Model Compared
The Setting
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AS is flat
PPP does not hold
Exchange Rate Expectations are static
Capital Mobility is less than perfect
Equilibrium and Monetary expansion Under Floating Rates
Fiscal Expansion Under Floating Rates
Monetary Expansion Under Fixed Rates
Fiscal Expansion Under Fixed Rates
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