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C HAPTER 17 FIXED EXCHANGE RATES AND FOREIGN EXCHAGNE INTERVENTION
Figure 17-1 Asset Market Equilibrium with a Fixed Exchange Rate, E O
Figure 17-2 Monetary Expansion Is Ineffective Under a Fixed Exchange Rate
Figure 17-3 Fiscal Expansion Under a Fixed Exchange Rate
Figure 17-4 Effect of a Currency Devaluation
Figure 17-5 Capital Flight, the Money Supply, and the Interest Rate
Figure 17-6 Effect of a Sterilized Central Bank Purchase of Foreign Assets under Imperfect Asset Substitutability
Figure 17AI-1 The Domestic Bond Supply and the Foreign Exchange Risk Premium Under Imperfect Asset Substitutability
Figure 17AIII-1 How the Timing of a Balance of Payments Crisis Is Determined
Copyright © 2002 Pearson Education, Inc. Slide 1.
© 2004 Pearson Addison-Wesley. All rights reserved 20-1 Exchange Market Intervention Unsterilized: Fed sells $1 billion of $, buys $1 billion of foreign.
Unit: International Trade Topic: Balance of Payments and the Foreign Exchange Market.
MONEY. MONETARY AGGREGATES M0 – base money (cash + deposits of the banks with the central bank) M1 – money, narrow money (cash + demand deposits) M2 –
Chapter 12: Aggregate Demand in Open Economy. The Mundell-Fleming Model Assumption –Small open economy –Free capital mobility (r = r*) –Flexible or fixed.
The International Financial System
The link between domestic savings, foreign savings, and domestic investment
Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. CHAPTER 17 Economic Shocks to Nations with Fixed Exchange Rates.
FIXED EXCHANGE RATES and Foreign Exchange Intervention Central Bank Balance Sheet Assets (1) Foreign Assets (2) Domestic Assets H = Base Money Liabilities.
Fixed Exchange Rates and Foreign Exchange Intervention
Exchange Rate: S - # of domestic currency units purchased for 1 US$. An increase in S is a depreciation of domestic currency and a decrease in S is.
Slide 17-1Copyright © 2003 Pearson Education, Inc. Why Study Fixed Exchange Rates? Four reasons to study fixed exchange rates: Managed floating Regional.
PowerPoint Presentation by Charlie Cook Copyright © 2004 South-Western. All rights reserved. Chapter 9 Exchange Rates and the Balance of Payments.
Exchange Rates Theories Asset Approach. Goods flows and Capital flows When there is not much international capital flows, TB>0 Currency appreciation.
Chapter 17 Fixed Exchange Rates and Foreign Exchange Intervention Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy International.
Chapter 18 Exchange Rate Theories. Copyright © 2007 Pearson Addison-Wesley. All rights reserved Topics to be Covered The Asset Approach The Monetary.
Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 6 International Trade, Exchange Rates, and Macroeconomic Policy.
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