Econ182_Probset2 - for the differences 5 China is widely...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
UNIVERSITY OF CALIFORNIA - Berkeley Department of Economics Econ 182 Prof. Kasa International Monetary Economics Spring 2008 PROBLEM SET 2 (Due April 8) Questions 1-3. Answer True, False, or Uncertain. Brie±y explain your answer. No credit without explanation (10 points each). 1. Countries that peg their exchange rate give up control of their domestic monetary policy. 2. Uncovered Interest Parity does not hold under ²xed exchange rates. 3. Devaluations increase domestic output. The following questions are short answer. 20 points each. 4. Using the DD-AA model, compare and contrast the relative effectiveness of temporary monetary and ²scal policies under ²xed and ±exible exchange rates. What accounts
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: for the differences? 5. China is widely suspected of ‘sterilizing’ its recent purchases of U.S. dollar assets. Explain how you would examine the validity of this claim (e.g., what data would you look at, and how would you use it to decide whether China sterizes its reserve in±ows). Why might China want to do this? Are there any costs associated with this policy? 6. Brie±y compare and contrast ²rst- and second-generation theories of speculative at-tacks. For example, how do their assumptions about government policy differ? How would you go about distinguishing these theories empirically? Which provides more support for IMF bailouts? 1...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online