Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Currency war wikipedia , lookup
Global financial system wikipedia , lookup
Modern Monetary Theory wikipedia , lookup
Real bills doctrine wikipedia , lookup
Foreign-exchange reserves wikipedia , lookup
Balance of payments wikipedia , lookup
Monetary policy wikipedia , lookup
Okishio's theorem wikipedia , lookup
Exchange rate wikipedia , lookup
Errata Sheet for Daniels/VanHoose International Monetary and Financial Economics 3e 0324261608 Errata corrections made in red. Chapter 2, Page 57: Foreign Exchange Market Intervention, 2nd paragraph Consider the euro appreciation depicted in Figure 2–8 on page 58. Suppose European policymakers prefer the value of the euro relative to the dollar to remain steady at Se and not to rise to S’. Given the rise in demand from D€ to D’€, at exchange rate Se the quantity of euros demanded, Q’dexceeds the quantity of euros supplied, Qe. It is this difference between quantity demanded and quantity supplied, depicted as the distance between point F and point E in the figure, which causes the euro to appreciate in value relative to the dollar. Chapter 2, Page 58: Figure 2-8 Foreign Exchange Market Intervention D’€ D€ Chapter 2, Page 63: Relative Purchasing Power Parity, 5th paragraph Using the percentage change formula, the rate of inflation in the United States between 2000 and 2004 was 8.80 percent [(121.12 – 111.4)/111.4 x 100 8.80]. For the United Kingdom, the rate of inflation over this period was 9.13 percent [(123.1 – 112.8)/112.8 x100 9.13]. The rate of depreciation of the dollar was 14.15 percent [(1.871 – 1.639)/1.639 x100 14.15]. Chapter 2, Page 67: Questions and Problems 5. Suppose we observe the following information for the euro area, Canada, and the 2003 U.S. Imports United States. Using this information, calculate the 2003 and 2004 effective exchange values for the U.S. dollar using 2003 as the base year. Do the values you calculated indicate an appreciation or depreciation of the U.S. dollar? What is the rate of appreciation or depreciation? Chapter 4, Page 112: Figure 4–3 A Shift in the Supply of Loanable Funds, caption Initially the market for loanable funds is in equilibrium at point A with interest rate RA. The shift of the supply schedule from SA to SB illustrates a decrease in the supply of loanable funds. At interest rate RA, the quantity demanded exceeds the quantity supplied. The interest rate will increaser until there is no longer an excess quantity demanded, which occurs at interest rate RB. Chapter 4, Page 127: 3rd paragraph Using the $1 million we borrowed, we can exchange it for SFr1.259 ($1 million x1.259 SFr/$ SFr1.259 million). Next we use the SFr1.259 million to purchase a Eurocurrency deposit with a return of 0.1875 (3/16 0.1875) percent. At the end of three months the principal and interest on the Swiss franc Euroccurency deposit is SFr1.259 [1 (0.001875/4)] SFr1,259,590. Chapter 6, Page 210: Table 6–3 The Consolidated Balance Sheets of the Federal Reserve System, the European System of Central Banks (ESCB), and the Bank of Japan 18.2 761.1 Chapter 9, Page 303: Figure 9–4 The Effect of a Foreign Exchange Purchase by the Bank of Japan on the Fed’s Balance Sheet Domestic credit -$1,000,000 Foreign exchange reserves Chapter 11, Page 406: Figure 11–11 A Two-Country Framework with Perfect Capital Mobility and a Fixed Exchange Rate, caption This figure shows how equilibrium real income levels and nominal interest rates arise in two nations whose borders are fully open to flows of financial resources. For the domestic country, an IS–LM equilibrium arises at point A in panel (a), at which equilibrium real income is equal to y1 and the equilibrium nominal interest rate is equal to R1. In the absence of any domestic currency depreciation, uncovered interest parity implies that the equilibrium domestic interest rate must equal the equilibrium foreign interest rate, R*1 in panel (b), which is determined by IS–LM equilibrium for the foreign nation. This is point A in panel (b), at which the equilibrium level of foreign real income is equal to y*1. Chapter 13, Page 466: Figure 13–7 The Effect of an Increase in Government Spending on Aggregate Demand in an Open Economy with a Floating Exchange Rate, caption In all three pairs of panels, an increase in government expenditures causes the IS schedule to shift rightward, inducing initial increases in the equilibrium nominal interest rate from R1 to Rand in the level of equilibrium real income from y1 to y exchange rates. Panel (a1) depicts a situation of low capital mobility, which the rise in government spending causes a balanceof-payments deficit at point B, which induces a currency depreciation and an additional rightward shift in the IS schedule. At the final equilibrium point C there is a potentially sizable expansion in aggregate demand in panel (a2). With high or perfect capital mobility, in contrast, an increase in government spending causes a balance-of-payments surplus, a currency appreciation, and a partially [panel (b1)] or fully [panel (c1)] offsetting leftward shift in the IS schedule. Thus, the aggregate demand effect of a rise in government expenditures is mitigated by higher capital mobility.