Aggregate Demand with Fixed Exchange RateThis chapter begins by explaining the impact of aggregate demand in an open economy, via fixed and flexible exchange rates. In a fixed or pegged exchange rate, the central bank doesn’t allow…
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Currency CrisesThis chapter focuses on what is behind a currency crisis, which is when the exchange rate depreciates and the local currency loses values. There are three types of models that explain the reason for…
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Exchange Rate ArrangementsIn this chapter, Professor Larraín covers the different forms of exchanging arrangements and some real-world cases of collapsing exchanging arrangements, or currency crises. A common case of…
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International Comparisons of Income (PPP)One of the challenges that faces macroeconomists is comparing the gross domestic product across countries. Using a numerical illustration of the Purchasing Power Parity (PPP), which is the concept of…
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