Can currency boards make low-inflation policies credible, International Economics

Assignment Help:

Q. Based on the case study, answer the following question: Can currency boards make low-inflation policies credible?

Answer: Currency boards have the power to bring in anti-inflation credibility from the country to which the domestic currency is hook. Currency boards usually mayn't acquire government debt however it can discourage fiscal deficits leading to reduce a major cause of inflation and devaluation. In command for a currency board to be successful is by increasing the banking sector and that is able to get the government under pressure to abandon the currency board. Additionally if the markets anticipate that the government is leaving the currency board the country mayn't benefit from the potential of a currency board.


Related Discussions:- Can currency boards make low-inflation policies credible

What monetary measures keep current exchange rate constant, Q. Suppose E is...

Q. Suppose E is fixed at E 0 and that the asset markets are in equilibrium. Suddenly output rises. What monetary measures keep the current exchange rate constant given unchanged e

Heckscher-ohlin theory, Q. Countries do not in fact export the goods the H...

Q. Countries do not in fact export the goods the H.O. theory predicts. Discuss. Answer: This statement isn't true that though one may find several cases where it seems to be

The law of reciprocal demand, what does the law of reciprocal states about ...

what does the law of reciprocal states about and how does it differ from the theories of smith and ricardo

Economic stability loss due to fixed exchange rates, Q. Explain why even o...

Q. Explain why even owners of capital that cannot be moved can avoid more of the economic stability loss due to fixed exchange rates when Norway's economy is open to capital flows

Sovereign wealth funds on gdp, In as much as Sovereign Wealth Funds (SWFs) ...

In as much as Sovereign Wealth Funds (SWFs) are established to achieve national objectives, the intentions of the United Arab Emirates -- one of the world's largest -- are open to

Show the phenomenon of overshooting, Q. Using the DD - AA framework, show t...

Q. Using the DD - AA framework, show the phenomenon of overshooting.  Use a figure to explain when it is taking place. Answer: The figure below illustrates the phenomenon of ov

Income distribution, argument about fair distribution of income and gnp as ...

argument about fair distribution of income and gnp as a measurment of economic growth

Neoclassical and classical trade theory, Q. Neoclassical and Classical tra...

Q. Neoclassical and Classical trade theory makes the case that free trade can bring a country to an optimum and economically efficient use of its resources; and therefore is an op

International capital mobility, International Capital Mobility is explained...

International Capital Mobility is explained below: The case for the international capital mobility was most evidently articulated by MacDougal in 1960. He presented a framework

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd