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According to the intertemporal current-account determination models, it is desirable for an emerging country to accumulate deficits in current account.
This can be modeled as a fall in Y1, with Y2 remaining constant. What should happen to current account in this country if there is increase in migratory flow?
What factors should be considered by policymakers in the choice between a fixed exchange rate regime and a floating exchange rate regime?
Using the concepts seen throughout this chapter and Chapter 7, explain why only two of these objectives can be simultaneously attained.
Explain what consists in third-generation currency crisis models, highlighting the main characteristics as well as presenting examples of countries.
Explain the break of the Argentine currency board regime in 2001 using the exchange rate crisis models seen in this chapter.
Without trust, the product fall will be 5%. Will the market participants trust the exchange rate parity? In this case, will the central bank defend the parity?
Present economic reasons that justify diversification of investor portfolios. What factors, besides rate of return, can influence the behavior of asset demand?
What should be the necessary exchange rate variation for the NIIP to be stable for next period? Would you be able to measure the valuation effect in this case?
What characteristics are desirable for a currency to be used as an international reserve value? What conclusion can you draw based on the analysis of this data?
What are the alternatives for an emerging economy suffering from original sin to deal with the problem? What are the associated advantages and disadvantages?
What is the impact of this shock on the IS curve for the German economy? What is the effect on the IS curve for the French economy?
What are the impacts of this change in fiscal policy on the real output and on the current account for this economy?
Using the MundellFleming model, analyze the effect of the American contractionist monetary policy on this foreign country in the following settings.
Assume the supply of the money grows at a constant rate. Based on this model, judge if following described situations can explain the depreciation of the euro.
What conditions should be met for this trajectory to be beneficial to the country? What would be the best economic policy to be implemented in the country? Why?
Suppose that the future exchange rate for 3 months is 1.2032 C$/US$. Calculate the future exchange rate between the yen and the American dollar for 3 months.
In this situation, what is the expectation of financial market participants in relation to the peso/dollar exchange rate in the future?
If the dollar depreciates in relation to the euro, what happens to the trade of this economy with countries that have adopted the euro as their currency.
If S = 0.5, what is the price of the cellular telephone in yuans? What would be the price of haircuts in each country?
What is the nominal interest rate for each of the bonds? Compare to the rate of return you would have received by investing in Chilean bonds.
How does the imposition of this tariff affect the real exchange rate between the peso and the pataca in the short term, that is, with fixed prices?
Suppose the Mexican government imposes a tax rate of t% on the profitability. How will this situation affect the uncovered exchange rate parity equation?
If the covered interest rate parity is valid, what should be the nominal exchange rate on the future dollar contract with a 1-year term?
The deficit in current account for Indebted is 6.8% of GDP. Calculate the lack in current resources and interpret the result.