Francesco Bianchi
Assistant Professor
464 Uris Hall
Ithaca, New York 14853
Econ 4520: Problem set 3
Due on Tuesday, March 8th in class or in Francescos mailbox by 10:00 AM (Uris
Hall, 4th floor).
Solve the following problems from KOM Chapter 15:
Problem
International Monetary Theory and Policy
Exam 2
1. Write down the Fisher equation.
2. Assume that the central bank increased money supply growth. How is the nominal
exchange rate affected at the time of the policy change? Briefly explain.
3. Define mathem
Question 16
A) Explain the effect of an increase in the money supply growth on r,P,E. How can your
answer be reconciled with the UIP?
An increase in money supply growth by increases expected inflation by the same
amount . However, the money supply level d
Question 1
1) Report the regression coefficients and the coefficient of determination R2:
for the regression: xri=0+1(rdpna/pop)i+error
0= 962.8434 1=-0.02578 R square= 0.034243
Plot the data and the regression line:
P= 0.016661 > 0.01, so we reject the n
International Monetary Theory
and Policy
Viktor Tsyrennikov
Uris Hall, room 452
Oce hours: TTh 1:30-2:30PM
Lecture 12: Internal vs External Balance
Internal Balance
Internal Balance
External Balance
External Balance
under Gold Standard
Internal balance =
Econ 3620. International Monetary Policy and Theory
Important topics
When preparing for the final exam make sure that you understand the following concepts.
These are the most important topics that we learned in this class.
Monetary (flexible price) model
International Monetary Theory and Policy
Final Exam
December 9th, 2011
Read questions carefully before answering. There are 10 shortanswer questions and two extended-answer questions. The first
10 questions are each worth 5 points and questions 11-12 are
Econ 4520:
International Monetary Theory and Policy
Lectures: TR 2:55-4:10, room RCK 115
Oce hours: TBA, room UH 452
Teaching assistant: Tianli Zhao
This class focuses on such international economics subjects as international capital ows, exchange rate de
International Monetary Theory and Policy
Exam 2. Solution
1. Write down the Fisher equation.
Solution. R-e=R*-*e.
2. Assume that the central bank increased money supply growth. How is the nominal
exchange rate affected at the time of the policy change? Br
International Monetary Theory and Policy
Exam 2. Solution
1. Write down all the equations behind the DD line and explain its slope.
Y=AD=C(Y-T)+G+I+CA(EP*/P,Y-T)
When E increases (depreciation) then CA improves and AD increases. TO restore
equilibrium in
Econ4520: homework 05 solution
Crisis management
Consider a world that consists of two equal-size economies. Both economies
are currently in the full-employment level of output.
A. Suppose that a crisis hits both economies: demand decreases for products o
Chapter 13: Fixed versus Floating Exchange Rates
Key Terms
Exchange rate risk
o Occurs when the profit in trade or the rate of return on an international
investment can fall quickly because of a change in the exchange rate.
Exchange rate mechanism
o An
Chapter 12: Policy Effects with Fixed Exchange Rates
Key Terms
Devaluation
o When the government lowers the value of its currency with respect to the
reserve currency or to gold in a fixed exchange rate system.
Revaluation
o When the government raises t
Chapter 11: Fixed Exchange Rates
Key Terms
Dollarization
o Currency fixing by adopting the U.S. dollar as ones currency.
Reserve currency standard
o A currency standard in which all countries fix to one central reserve
currency, while the reserve curren
Econ4520: homework 03 solution
Question 1. Data
The Penn World Table (PWT) that can be found at http:/www.rug.nl/
research/ggdc/data/penn-world-table is a known source of data used for
international comparisons. We will use its vast collection of data to
Econ4520: homework 04 solution
Question 1. Basics of DD-AA
1. What equations were used to build the DD curve?
Solution. Y = AD = C(Y T ) + I + G + CA(EP /P, Y T ). These
equations imply a positive relation between E and Y (DD curve).
2. What equations wer
Econ 4520 International Monetary Theory and Policy
Problem Set 3 Solution
Problem 1 (KOM Chp. 15)
A reduction in the home money demand causes interest rates in the home country to fall from
Rh,1 to Rh,2. With no change in expectations, there will be a dep
Chapter 16
Price Levels
and the Exchange Rate in the Long Run
Preview
Law of one price
Purchasing power parity
Long-run model of exchange rates: monetary approach
Relationship between interest rates and inflation: Fisher effect
Shortcomings of purcha
Francesco Bianchi
Assistant Professor
464 Uris Hall
Ithaca, New York 14853
Econ 4520: Problem set 1
Due on Thursday, February 11th. You can leave your problem set in Francescos
mailbox before class (Uris Hall, 4th floor) or hand it in class.
Do the follow
Econ 4520: First Midterm
Answer all the questions below. You have an hour for a total of 80 points.
Answer the following multiple choice questions. Each of them is worth 2 points.
M1) A country's gross national product (GNP) is
A) the value of all final g
Chapter 15
Money, Interest Rates, and
Exchange Rates
Preview
What is money?
Control of the supply of money
The willingness to hold monetary assets
A model of real monetary assets and
interest rates
A model of real monetary assets, interest rates, and
Econ 434
Professor Ickes Fall 2002
Midterm Exam II
Answer Sheet 1. (25%) Use the asset approach to exchange rate determination to explain what happens to the exchange rate, both at impact and in the long run, in the following circumstances. Use appropriat