Global Economic Environment of the Firm
Macro Economics
Monetary Policy and Exchange Rate Regimes
The questions should be answered using Macro Economic arguments using graduate level thinking. Please pay attention to the questions asked. More detail, the better.
Questions: The article argues that, ``the rigidity of the currency board made it difficult to respond to these shocks." You should think of the currency board simply as a fixed exchange rate regime.
(i) What are the restrictions that the currency board imposes on economic policy, which makes it difficult to respond to external shocks?
(ii) If Argentina was not on a currency board what could it have done to respond to the external shocks of rising cost of capital, and the fact that Brazil, Argentina's main trading partner had devalued its currency?
(i) What are the restrictions that the currency board imposes on economic policy, which makes it difficult to respond to external shocks?
A currency board is a fixed exchange rate regime. By fixing the exchange rate the Central bank gives up its ability to influence the economy through monetary policy.
Suppose the central bank wants to increase the output and give a boost to the economy in the short run by lowering the interest rate. Thus it increases the money supply through a purchase of domestic assets. Under a floating exchange regime this would cause a depreciation of the domestic currency. However in a fixed exchange regime the central bank would not ...
Solution Summary
The solutions answers 2 questions on currency board and external shocks.
... In other words, different colors of money. ... can be a useful way of communicating to board members who ... It is increasingly common for nonprofit boards to have an ...
... How did implicit attitudes, perhaps, influence the school board's decision to punish such ... After receiving this money, the organization decided to pay over $160 ...
... In other words, different colors of money. ... can be a useful way of communicating to board members who ... It is increasingly common for nonprofit boards to have an ...
... than just one year) global economic outlook for presentation to the APF Board. ... GDP, inflation, interest rates (preferably the 10-year rate), currencies, and US ...
... The World Bank is run by the Board of Governors, who are ... allows countries to rebuild their international reserves, stabilize their currencies, continuing to ...
... and values: Non-agreement on new boards direction or ... the employees, current management, investors, new board members ... to get an attractive return on their money. ...
... makes money for operating the game, except as a player, or games operated by charitable or educational organizations which are approved by the board pursuant ...
