What This Document Is
This document is a problem set for an advanced undergraduate course in International Monetary Economics, offered at the University of California, Berkeley. It’s designed to challenge students to apply theoretical frameworks to real-world economic scenarios, focusing on the interplay between monetary and fiscal policies in an open economy context. It’s a practice exercise intended to solidify understanding of core concepts, not a lecture or textbook chapter.
Why This Document Matters
This problem set is invaluable for students enrolled in similar upper-level economics courses. It’s particularly helpful for those preparing for exams or seeking to deepen their grasp of international finance principles. Working through these types of problems builds analytical skills and prepares you to interpret complex economic events. If you're studying exchange rate determination, current account dynamics, or the effects of government policies in a globalized world, this will be a useful resource.
Topics Covered
* The relationship between fiscal policy (taxes, government spending) and the current account.
* The impact of monetary policy on income and the current account.
* Exchange rate pass-through and its variation across economies.
* The potential for inflationary biases in policy formulation.
* Distinguishing between the effects of permanent and temporary monetary shocks.
* The interplay between fiscal expansions, wealth accumulation, and exchange rate adjustments.
What This Document Provides
* A series of analytical problems requiring the application of the DD-AA model.
* Opportunities to analyze real-world economic events, such as the US experience in the 1980s.
* Thought-provoking questions designed to encourage critical thinking about economic theory.
* A case study involving US current account and exchange rate data for analysis.
* Exercises that require interpreting graphical representations of economic relationships.
