China has long pegged its currency (the Yuan) to the U.S. dollar. Assuming the free flow of

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China has long pegged its currency (the Yuan) to the U.S. dollar. Assuming the free flow of capital across borders, explain why China cannot have an independent monetary policy reaction curve with a fixed currency.

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Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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Posted Date: May 08, 2019 05:43 AM

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China has long pegged its currency (the Yuan) to the U.S. dollar. Assuming the free flow of

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This is perhaps because perfect capital mobility and fixed exchange rate do not allow the ... View the full answer

Money Banking and Financial Markets

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