Homework1 - W3211 Spring 2009 Professor Vogel Homework #1:...

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W3211 Spring 2009 Professor Vogel Homework #1: Due Tuesday 01/27/09 Please write your name on the top of every page of your homework (in case they get separated) and please staple all pages together. Where appropriate, you must show all work. If you just give an answer without work, Question #1. (40 Points) Iceland just experienced a massive set of bank runs, in spite of providing deposit in- surance, the damage of which may be equivalent to the great depression in the U.S. The Icelandic banking sector was huge relative to the small Icelandic economy because the banks took in a lot of foreign deposits, denominated in FX, by providing a relatively high interest rate. For the sake of this homework, suppose the banks were in perfect shape when the bank runs occurred (although this may be the case for some banks, it is probably not the case for all of them). Using the information provided in this question and in Lecture 1, answer the
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This note was uploaded on 12/21/2009 for the course ECON 1211 taught by Professor Govel during the Spring '08 term at Columbia.

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Homework1 - W3211 Spring 2009 Professor Vogel Homework #1:...

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