Learning Roadmap
Capital flows and the real exchange rate
Summary
- The TNT model: Swan diagram, Salter diagram; internal and external balance.
- Aggregate demand and the real exchange rate. Borrowing and repayment cycles.
- Adjustment difficulties: sticky wages; supply side rigidities.
- The Capital Flow problem: Factors driving capital inflows. Stops and bonanzas. Policy responses.
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Exercises: 5, 7; 8.; 9; 10,11. |
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Quiz 6 |
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