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How might devaluation affect national saving and domestic investment?
What would happen if all countries in the world simultaneously tried to improve employment and the balance of payments by imposing tariffs?
Why would the international monetary adjustment mechanism have been symmetric or asymmetric?
Show that ESF interventions are automatically sterilized and thus do not alter money supplies. How do ESF operations affect the foreign exchange risk premium?
What is the effect on its foreign reserve holdings? On its money supply? Can it offset either of these effects through domestic open-market operations?
Analyze a transitory increase in the foreign interest rate, R*. Under which type of exchange rate is there a smaller effect on output-fixed or floating?
If the foreign inflation rate rises permanently, would you expect a floating exchange rate to insulate the domestic economy in the short run?
How would you analyze the use of monetary and fiscal policy to maintain internal and external balance under a floating exchange rate?
How would you expect the use of monetary expansion alone to affect the U.S. economy in the short and long runs?
What about monetary expansion? Would your answer change if you thought different German and Japanese policies might facilitate different U.S. policies?
Develop an analysis like the one in the appendix to show the consequences of different policy choices.
Why might EMS provisions for the extension of central bank credits from strong- to weak-currency members have increased the stability of EMS exchange rates?
What would have been the maximum possible difference between the interest rates on six-month lira and DM deposits? On three-month deposits?
What would have been the implications for the credibility of the current lira/DM exchange parity?
What happens to the exchange rate of the Norwegian krone against non-euro currencies? How is Norway affected?
Why did the Economist think the opposite would occur soon after Britain exited the ERM?
Why would the failure to create a unified EU labor market be particularly harmful to the prospects for a smoothly functioning EMU?
If these estimates are correct, what is the effective rate of protection received by European aircraft producers?
Calculate the total effect on welfare of a tariff of 5 per unit levied on imports. Calculate the total effect of a production subsidy of 5 per unit.
Discuss the potential economic costs of such an expansion of the European Union, from the point of view of Western Europe, Eastern Europe and other nations.
Explain how this can prevent development of a domestic industry, and how infant industry protection can help.
Suppose a country has the Harris-Todaro problem. What policy or combination of policies would you advocate to solve this problem?
If the United States had its way, it would demand that Japan spend more money on basic research. Analyze why in terms of the analysis of appropriability.
Can you think of reasons why a government might be concerned about a large current account deficit or surplus?
What is the price of a bratwurst in terms of hot dogs? All else equal, how does this relative price change if the dollar appreciates to $1.25 per euro?