Analyse the consequences for interest rates

Reference no: EM132194058

Question - International finance: Use the model to analyse the consequences for interest rates and the exchange rate of the central bank selling some of the foreign bonds it owns and thereby decreasing its foreign currency reserves (i) when the impact of changes in official reserves on the domestic monetary base is sterilised, by the central bank buying domestic bonds to the same value; (ii) when the sale of foreign bonds is unsterilised.

Reference no: EM132194058

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