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International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz
Edition 10ISBN: 978-0133423648International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz
Edition 10ISBN: 978-0133423648 Exercise 4
Suppose an economy open to international capital movements has a crawling peg exchange rate under which its currency is pegged at each moment but is continuously devalued at a rate of 10 percent per year. How would the domestic nominal interest rate be related to the foreign nominal interest rate? What if the crawling peg is not fully credible?
Explanation
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Crawling peg is a part of fixed exchange...
International Economics 10th Edition by Paul Krugman,Maurice Obstfeld ,Marc Melitz
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