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Unformatted text preview: Speculators bet on devaluation CB runs down its reserves; forced to devalue o All of these occur with some kind of fixed XR regime o Happened in Mexico and East Asian countries Capital Controls o Restrictions placed on foreign and domestic investors designed to obstruct their ability to purchase domestic assets or sell off domestic assets Controlling Outflows o Problems: Less attractive for investors Lends itself to government corruption Seen as a sign of weakness Controlling Inflows o Problems: Same as above Decreased growth Should CB target Exchange Rates? o...
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This note was uploaded on 02/03/2011 for the course ECON 303 taught by Professor Boedo during the Fall '08 term at UVA.
- Fall '08
- Interest Rates