Marshall-Lerner Condition
Marshall-Lerner condition – real depreciation leads to increase in net exports
Economics
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Book page:
http://course-notes.org/Economics
Effects of Policy on IS Relation in Open Economy
increase in domestic demand – assume increase in gov’t spending (G)
IS Relation in Open Economy
demand for domestic goods (Z) – now has import and export factors
Stock Market
equity finance - raising funds through stocks/shares
- debt finance - raising funds through bonds/loans
- dividends
Bond Yields
n-year interest rate -
- constant annual interest rate making present bond price equal to present value of future payments
- P2t = (f
Bonds, Arbitrage
types of bonds -
- issued by gov't >> gov't bonds
- issued by firms >> corporate bonds
- risk premium - diff
Nominal/Real Interest Rates in IS/LM Model
real vs nominal interest in IS/LM
- IS model: firms want values in terms of goods
- dependent on real interest rate
- Y = C(Y-T)
Expected Present Discounted Value
nominal vs real interest rates -
- nominal interest rates (it) - in terms of currency, how interest is naturally expresse
Exchange Rate Regimes
devaluation – real depreciation
Medium Run Adjustments
adjustment in medium run under fixed exchange rates –
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