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Understanding Small Open Economies: Policies and Financial Crisis Examples

Explore the dynamics of small open economies, implications of fiscal/monetary policies, fixed exchange rates, and financial crisis scenarios. Learn about imperfect capital mobility and the Mundell-Fleming model in the long run. Dive into graphical representations and practical examples.

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Understanding Small Open Economies: Policies and Financial Crisis Examples

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  1. Chapter 12 - Witte • Open Economy Mundell-Fleming • Small Open Economy • Perfect Capital Mobility r =r*, Prices Fixed • IS* • LM*

  2. Chapter 12 - Witte • Small Open Economy Graphically

  3. Chapter 12 - Witte • Fiscal/Monetary Policy Implications

  4. Chapter 12 - Witte • Small Open Economies with Fixed Exchange Rates

  5. Chapter 12 - Witte • Imperfect Capital Mobility • IS* • LM*

  6. Chapter 12 - Witte • Financial Crisis Example 1

  7. Chapter 12 - Witte • Financial Crisis Example 2

  8. Chapter 12 - Witte • Fixed or Floating • “Impossible” or “Incompatible” or “Unholy” Trinity

  9. Chapter 12 - Witte • Mundell-Fleming in Long-Run • Price not Fixed, Perfect Capital Mobility r=r* • Graphically

  10. Chapter 12 - Witte • Mundell-Fleming in Long-Run Example

  11. Chapter 12 Appendix - Witte • Large Open Economy – Wallet Model • IS • LM • NCO(r) = NX(RER)

  12. Chapter 12 Appendix - Witte • Large Open Economy – Wallet Model, Graphically

  13. Chapter 12 Appendix - Witte • Large Open Economy - Wallet Model, Example 1

  14. Chapter 12 Appendix - Witte • Large Open Economy - Wallet Model, Example 2

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