ECO 365 - International Monetary Economics
Prof. Jordi Mondria
1. [15 points] Why does a temporary increase in government spending cause the current
account in the short run to fall by a smaller amount than does a permanent increase
The Choice of Exchange Rate Regime and The Euro
1. 2. 3.
The Case of Britain and its peg The determinants of an exchange rate regime The theory of optimum currency areas
4. The conditions for joining Eurozone 5.
Assessing the Euro
Output and the Exchange
Long run models are useful when all prices of inputs and
outputs have time to adjust.
In the short run, some prices of inputs and outputs may
not have time to adjust, due to labor contracts, costs of