Lectures
Week 2
Universiteit van Amsterdam · Economics and Business Economics
Y2 - International Money and FinanceInhoud
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- Week 2
- Internal vs. External Economic Objectives
- The Policy Trade-Off
- The Swan Diagram (1955)
- Historical & Policy Examples
- From Swan to Mundell-Fleming
- IS-LM-BP Model Overview
- Capital Mobility & BP Slope
- Policy Effects in IS-LM-BP
- The Macroeconomic Trilemma (Impossible Trinity)
- Policy Assignment (Tinbergen’s Rule)
- Limitations of IS-LM-BP
- Theories of Exchange Rate Determination
- The Law of One Price (LOP)
- Formula for Big Mac equilibrium rate:
- Big Mac Parity Over Time
- Critiques of Big Mac Parity
- Comparing with Other Goods: iPod Parity
- From Law of One Price to Purchasing Power Parity (PPP)
- Absolute vs. Relative PPP
- Relationship Between Absolute and Relative PPP
- Evidence on PPP
- Why Does PPP Fail in Practice?
- The Balassa-Samuelson Effect Explained
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