Econ110BW11 - Lec16 A - GR_ol

Econ110BW11 - Lec16 A - GR_ol - Macroeconomics B Econ 110B,...

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Macroeconomics B Econ 110B, Winter 2011 Prof. Giacomo Rondina Lecture 16
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The Open Economy ± Trade is in goods, services and capital (financial assets). utcome of economic policies depend on international trade ± Outcome of economic policies depend on international trade. ± Trade Balance and Intertemporal Borrowing and Lending ± Balance of Payments (Current Account and Capital Account) ± GDP and GNP closer look at the decisions in the Open Economy ± A closer look at the decisions in the Open Economy ¾ Markets for Goods ¾ Markets for Assets 2 Openness in Goods and Financial Markets (Ch. 18)
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The Open Economy: Market for Goods Trade Balance: TB=X–IM hoice between Domestic Goods and Foreign Goods ± Choice between Domestic Goods and Foreign Goods ± How to make the choice? Two steps. A. Exchange domestic currency in foreign currency B. Compare price of domestic and foreign goods Nominal Exchange Rate allows Step A Nominal Exchange Rate: E Price of 1 unit of Domestic Currency in terms of Foreign Currency 3 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Yen 4 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Euro ¾ Note: the Nominal Exchange Rate is measured as 1/E in this chart!!! 5 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Euro Financial Crisis ¾ Note: the Nominal Exchange Rate is measured as 1/E in this chart!!! 6 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Euro Greek Debt Crisis ¾ Note: the Nominal Exchange Rate is measured as 1/E in this chart!!! 7 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Yuan ¾ Nominal Exchange Rate and Monetary Policy 8 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Yuan Yuan’s Devaluation ¾ Nominal Exchange Rate and Monetary Policy 9 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Yuan Yuan’s Revaluation ¾ Nominal Exchange Rate and Monetary Policy 10 Openness in Goods and Financial Markets (Ch. 18)
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Nominal Exchange Rate: Dollar vs Real ¾ Nominal Exchange Rate and Monetary Policy 11 Openness in Goods and Financial Markets (Ch. 18)
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This note was uploaded on 01/18/2012 for the course ECON 101 taught by Professor Bansak during the Summer '07 term at San Diego State.

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Econ110BW11 - Lec16 A - GR_ol - Macroeconomics B Econ 110B,...

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