Economics 100B - 23 (4-10-2007)

Economics 100B - 23 (4-10-2007) - Economics 100B Professor...

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Economics 100B Professor Steven Wood 4/10/07 Lecture 23 ASUC Lecture Notes Online (formerly Black Lightning) is the only authorized note-taking service at UC Berkeley. Please do not share, copy or illegally distribute these notes. Our non-profit, student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. Sharing or copying these notes is illegal and could end note taking for this course ANNOUCEMENTS The maximum on the exam was a 92, the minimum was a 23, the mean was 64.5, the median was 68.5, and the standard deviation was 13.2. The course is graded on a curve. So far the midterms are worth 50% of your grade. You still have a few problem sets and a final exam left to determine your final grade. All grades will be normalized to accommodate different grading on problem sets by GSIs. LECTURE Today we will be discussing the Fleming-Mundell model. This model exams a small open economy with perfect capital mobility. This turns out to be useful because most countries in the world fit these criteria. Capital Mobility The slope of the balance of payments line indicates the degree of capital mobility in a country. A horizontal line means a country has perfect capital mobility. This means that domestic interest rates cannot vary from the world interest rates (in real terms). This is the situation we will examine today. A vertical balance of payments line would mean you have complete capital immobility which means no capital comes in or leaves the country. Upward sloping balance of payment lines are typical of large countries and represent partial capital mobility. Perfect Capital Mobility
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This note was uploaded on 09/20/2009 for the course ECON ECON taught by Professor Shomali during the Spring '04 term at Berkeley.

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Economics 100B - 23 (4-10-2007) - Economics 100B Professor...

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