CHAPTER 6. Fixed Prices: The Mundell – Fleming Model

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Presentation transcript:

CHAPTER 6. Fixed Prices: The Mundell – Fleming Model The Setting Equilibrium Monetary Expansion With A Floating Exchange Rate Fiscal Expansion With A Floating Exchange Rate Monetary Expansion With A Fixed Exchange Rate Fiscal Expansion With A Fixed Exchange Rate The Monetary And The Mundell-Fleming Model Compared

The Setting AS is flat PPP does not hold Exchange Rate Expectations are static Capital Mobility is less than perfect

Equilibrium and Monetary expansion Under Floating Rates

Fiscal Expansion Under Floating Rates

Monetary Expansion Under Fixed Rates

Fiscal Expansion Under Fixed Rates

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