ECON 3K03 Lecture Notes - Lecture 20: Speculative Attack, Monetary-Disequilibrium Theory, Monetary Policy
8 Feb 2015
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Document Summary
The economics of money, banking, and financial markets. Unsterilized foreign exchange intervention: an unsterilized intervention in which domestic currency is sold to purchase foreign assets, leads to: Effect of an unsterilized purchase of dollars and. +b: to counter the effect of the foreign exchange intervention, conduct an offsetting open market operation, there is no effect on the monetary base and no effect on the exchange rate. Value of a currency is pegged relative to the value of one other currency (anchor currency: floating exchange rate regime. Value of a currency is allowed to fluctuate against all other currencies: managed float regime (dirty float) Attempt to influence exchange rates by buying and selling currencies. Influenced heavily by production of gold and gold discoveries: bretton woods system. Fixed exchange rates using u. s. dollar as reserve currency. General agreement on tariffs and trade (gatt: european monetary system (ems)
