Perfect capital mobility with fixed exchange rates forces monetary policy to be accommodative; in effect, fiscal policy

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“Perfect capital mobility with fixed exchange rates forces monetary policy to be accommodative; in effect, fiscal policy gains control of monetary policy.” Explain.

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Macroeconomics

ISBN: 978-0138014919

12th edition

Authors: Robert J Gordon

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Question Posted: Dec 09, 2015 03:11 AM

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Perfect capital mobility with fixed exchange rates forces monetary policy to be accommodative; in effect, fiscal policy

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A fiscal expansion increases interest rates but with perfect capital mobilit...View the full answer

Macroeconomics

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