PS4 - (a) What are the bene&ts of maintaining a pegged...

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Econ 356 Introduction to International Finance Spring 2010 Department of Economics, University of British Columbia Viktoria Hnatkovska Problem Set 4. Due at the beginning of class on Monday, March 22. 1. Problem 2, Chapter 15 in KO, 8th edition. 2. Problem 6, Chapter 15 in KO, 8th edition. 3. Problem 9, Chapter 15 in KO, 8th edition. 4. Problems 16 and 17, Chapter 15 in KO, 8th edition. 5. Based on the readings on Chinese exchange rate policy I compiled on the course web- page, provide the answers to the following questions:
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Unformatted text preview: (a) What are the bene&ts of maintaining a pegged exchange rate regime? (b) What are the costs of maintaining a pegged exchange rate regime? (c) Why has Chinese central bank been accumulating foreign exchange reserves? (d) Given low interest rates on Chinese holdings of US T-bills, could foreign exchange reserves in China be spent better? How? Discuss. (e) Could revaluation of Chinese currency signi&cantly help in the adjustment of current account imbalance in the US? 1...
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This note was uploaded on 01/28/2011 for the course ECON 304 taught by Professor Michaelpeters during the Spring '10 term at UBC.

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