Ask Question, Ask an Expert


Ask Macroeconomics Expert

problem 1: The International Monetary System: Exchange Rate Regimes

Below are data on (a) Monthly US$/Euro and US$/Country A currency exchange rates for December 1999-September 2013; (b) US and Country A monthly foreign exchange reserves December 1999-August 2013 and (c) Country A interest rates for January 2005-September 2013.

i) Apply the Reinhart (2000) methodology to the exchange rate and reserves data to identify Country A’s exchange rate regime.

ii) Utilize your above conclusion and the exchange rate, reserves and interest rate data to discuss the pressures on Country A’s exchange rate during the height of the recent financial crisis (2007-2008) and post-crisis.

problem 2: Monetary Unions

Below are the selected data on Country B for 10 years. Country B is a member of a monetary union with several other countries. During this 10 year period, the union central bank largely opted for monetary policy restraint and price stability in accordance with average economic developments in the monetary union.

A) In the absence of monetary policy and the exchange rate as stabilization instruments and given the monetary policy stance of the monetary union, briefly discuss the feasibility of using fiscal policy to stimulate the economy. Inform your discussion with a debt sustainability framework analysis in order to assess the “sustainable fiscal deficit.” Use the debt sustainability framework we discussed with regard to EMU convergence requirements and assume that a sustainable public debt/GDP ratio for Country B is the ratio achieved in year 10. Make sure to include a table with your debt sustainability calculations.

B) Discuss, illustrating with the appropriate AS/AD diagrams, why relinquishing monetary policy and exchange rate policy as stabilization instruments may prove costly for Country B. Assume that Country B lacks sufficient wage flexibility, labor mobility and integrated financial markets to adjust to shocks.

Note: Observe page limits, formatting guidelines and other instructions.

Use the “IMF Format” writing style.

Use one-inch margins, 12 point Times New Roman font size and single spacing.

Include and reference relevant charts and tables for a well-constructed answer. Points will be given for relevant charts and tables.

Page limits are text-only - any charts, tables etc. you choose to add are not included in the page limits. Cite all references (APA citation style is preferred). This applies to references outside of course material.

1174_monetary unions.jpg

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91991

Have any Question? 

Related Questions in Macroeconomics

In 2-3 paragraphs respondmuch has been made of the fact

In 2-3 paragraphs respond: Much has been made of the fact that people don't consistently act with scientific rationality. What is meant by rationality ? Consider the three "systematic mistakes" discussed in your text. It ...

Analyse unemployment in the australian economy under the

Analyse unemployment in the Australian economy under the following headings: - Introduction: Explain why there is unemployment in your country of birth? - How is unemployment measured? - What is the causes of unemploymen ...

Identify describe one advertisement which you feel is

Identify (describe) one advertisement which you feel is effective. Explain why you feel that this ad could help generate sales; i.e. what is its major appeal? Based upon your experience, does the soft drink industry rese ...

Economics paper-general topoc area estimate and evaluate a

Economics Paper -General Topoc Area: estimate and evaluate a model of household saving. -Specific Topic is: Assessing whether the significant impact increase in the household saving rate soon after the onset of the 2008 ...

1 as you explore various application software discuss at

1. As you explore various application software, discuss at least one of your preferred application software with the class, why you find the software beneficial, and how your classmates may benefit from the software? 2. ...

Explain the three types of incentives for providers for

Explain the three types of incentives for providers for efficiency in the delivery of healthcare services. Explain who bears the financial risk-the provider, the patient, or the managed care organization. Offer your reco ...

Questionnbspshell programmingyou have created the directory

Question:  Shell Programming You have created the directory structure and some base files to be used by the Web server and Web site. For the Web site to be created in a production environment, you need to package your co ...

Discussion pointswhat might be some challenges in

Discussion Points: What might be some challenges in formatting a document? What are the added values in formatting a documenting? What new feature (s) enhanced your ability to better format your documents. I want to also ...

In st pau mn best buy sells seventy-five 50 hdtvs per week

In St. Pau, MN. Best Buy sells seventy-five 50" HDTVs per week whereas the Minneapolis, MN store sells only fifty 50" HDTVs per week. Based upon data obtained in the financing process, St. Paul customers earn an average ...

1 assume the government has set a goal in 2016 to be

1. Assume the government has set a goal in 2016 to be more environmentally friendly; to meet this goal the government has come up with a strategy of providing consumers income tax credits for installing an energy efficie ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate