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Krugman (1979) Model a) Let say a country runs a trade deficit of $100 but has a balanced budget, when do they experience a currency
Krugman (1979) Model
a) Let say a country runs a trade deficit of $100 but has a balanced budget, when do they experience a currency crisis in the Krugman model, if at all?
b) What happens to reserve balances if a country with a floating exchange rate runs a large budget deficit?
c) What happens to reserve balances if a country with a fixed exchange rate runs a large budget deficit?
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