Suppose that some central banks sell large amounts of their reserves in U.S. dollars on the foreign

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Suppose that some central banks sell large amounts of their reserves in U.S. dollars on the foreign exchange market to buy an equivalent amount of Euro. Is this action equivalent to a sterilized sale of U.S. dollars in the foreign exchange market?

What might be the effects on the European Central Bank? Explain your assumption about perfect versus imperfect asset substitutability.

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International Finance Theory And Policy

ISBN: 9780134519548

11th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J Melitz,

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Question Posted: Mar 13, 2024 03:00 AM

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Suppose that some central banks sell large amounts of their reserves in U.S. dollars on the foreign

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International Finance Theory And Policy

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