Consider the monetary approach to exchange rates (MAER) model given in Equation 15.19. Suppose that each of
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Consider the monetary approach to exchange rates (MAER) model given in Equation 15.19.
Suppose that each of the domestic hat variables in that equation is growing at exactly the same rate as its foreign counterpart. What does the MAER model predict will happen to the exchange rate? Why does the model make this prediction?
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