Question
Exercises - open economy Redo the 4 graphical analyzes studied in class to 1. fiscal expansion 2. monetary expansion in a situation of perfect capital
Exercises - open economy
Redo the 4 graphical analyzes studied in class to
1. fiscal expansion 2. monetary expansion
in a situation of perfect capital immobility (vertical BP curve) in both cases of (i) fixed and (ii) flexible exchange rates. For each graph, provide a brief description of the economic logic.
Redo the same 4 graphical analyzes
1. fiscal expansion 2. monetary expansion
in a situation of limited capital mobility (steep BP curve)
in both cases of (i) fixed and (ii) flexible exchange rates. For each graph, provide a brief description of the economic logic.
Blanchard chapter 17 number 5
Blanchard chapter 18 issues 2, 4
Consider an IS-LM model in an open economy with perfect capital mobility. The economy described by the following equations is in external equilibrium:
= 160 + 0.69
= 180-1000
=20
= 0.5 -200 =25-0.09-2(/p)
=230
=1
=2
Question: If the central bank defends a nominal exchange rate = 90 what are the equilibrium values of the GDP, the interest rate of the balance on the current account and on the capital account?
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