Question
the textbook states that under perfect capital mobility, interest rates in the home country can-not diverge from those abroad. take a look at interest rates
the textbook states that under perfect capital mobility, interest rates in the home country can-not diverge from those abroad. take a look at interest rates in the United States and the european Union.
a. Go to http://fred.stlouisfed.org. Click on "Category," under "Money, Banking, & Finance" select "Interest rates" and then select "treasury Bills." Select the variable "3-Month treasury Bill," and get the data going three years back. (You can choose between daily, weekly, or monthly data.)
b. Go again to http://fred.stlouisfed.org. this time look under "Interest rates" and select and download "3-Month London Interbank Offered rate (LIBOr)".
c. Make a graph in eXCeL that includes the two 1-year interest rates on government bonds, one for the United States and one for the european Union. Visually, what is the relation-ship between the two variables? Can you conclude something about the degree of capital mobility between the United States and the european Union?
**Please include the graph in c for the answer
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