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    The document contains figures that illustrate macroeconomic policy implications in an open economy with perfect capital mobility. Figure 29.1 shows that with perfect capital mobility, monetary policy cannot affect real GDP and the interest rate is determined by the world interest rate. Figure 29.2 shows that with fixed exchange rates, monetary policy also cannot affect real GDP. Figure 29.3 shows that fiscal policy can affect real GDP with fixed exchange rates. Figure 29.4 and 29.5 show the effects of monetary and fiscal policy respectively with floating exchange rates.

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    LIPSEY_FIGS29Visit Us @ Management.umakant.info

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    The document contains figures that illustrate macroeconomic policy implications in an open economy with perfect capital mobility. Figure 29.1 shows that with perfect capital mobility, monetary policy cannot affect real GDP and the interest rate is determined by the world interest rate. Figure 29.2 shows that with fixed exchange rates, monetary policy also cannot affect real GDP. Figure 29.3 shows that fiscal policy can affect real GDP with fixed exchange rates. Figure 29.4 and 29.5 show the effects of monetary and fiscal policy respectively with floating exchange rates.

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    8 views14 pages

    LIPSEY - FIGS29Visit Us at Management - Umakant.info

    Uploaded by

    welcome2jungle
    The document contains figures that illustrate macroeconomic policy implications in an open economy with perfect capital mobility. Figure 29.1 shows that with perfect capital mobility, monetary policy cannot affect real GDP and the interest rate is determined by the world interest rate. Figure 29.2 shows that with fixed exchange rates, monetary policy also cannot affect real GDP. Figure 29.3 shows that fiscal policy can affect real GDP with fixed exchange rates. Figure 29.4 and 29.5 show the effects of monetary and fiscal policy respectively with floating exchange rates.

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    of 14

    CHAPTER 29:

    Macroeconomic Policy in an Open


    Economy

    FIGURES
    Interest Rate Figure 29.1 The Macroeconomic Implications of Perfect Capital Mobility

    i = i* BB

    Real GDP
    Interest Rate Figure 29.1 The Macroeconomic Implications of Perfect Capital Mobility

    i = i* BB

    IS

    Real GDP
    Figure 29.1 The Macroeconomic Implications of Perfect Capital Mobility

    LM
    Interest Rate

    i = i* BB

    IS

    Real GDP
    Figure 29.2 Monetary Policy With Fixed Exchange Rates and Perfect Capital Mobility

    i*
    Interest Rate

    BB

    Real GDP
    Figure 29.2 Monetary Policy With Fixed Exchange Rates and Perfect Capital Mobility

    i*
    Interest Rate

    BB

    IS

    Real GDP
    Figure 29.2 Monetary Policy With Fixed Exchange Rates and Perfect Capital Mobility

    LM0

    i*
    Interest Rate

    BB

    IS

    Y*
    Real GDP
    Figure 29.2 Monetary Policy With Fixed Exchange Rates and Perfect Capital Mobility

    LM0

    1 LM1

    2
    i*
    Interest Rate

    IS

    Y*
    Real GDP
    Figure 29.3 Fiscal Policy With Fixed Exchange Rates and Perfect Capital Mobility
    LM0
    LM2
    LM1

    Interest Rate
    i* BB

    IS1
    IS2

    IS0

    GDP Y* Y1 Y2
    0 (i). IS/LM

    SRAS1
    LRAS
    SRAS0

    P1
    Price Level

    P0

    AD1
    AD0

    0 GDP Y* Y1 Y2 (ii). AS/AD


    Figure 29.4 Monetary Policy with Floating Exchange Rates and Perfect Capital Mobility
    LM0 LM1

    Interest Rate
    i* BB

    (i). IS/LM
    IS1
    IS0

    0
    Y* GDP

    LRAS
    SRAS1

    SRAS0

    P1
    Price Level

    P0
    (ii). AS/AD

    AD1

    AD0
    0 GDP Y* Y1
    Figure 29.5 Fiscal Policy With Floating Exchange Rates and Perfect Capital Mobility

    i*
    Interest Rate

    BB

    Y*
    GDP
    Figure 29.5 Fiscal Policy With Floating Exchange Rates and Perfect Capital Mobility

    LM

    i*
    Interest Rate

    BB

    Y*
    GDP
    Figure 29.5 Fiscal Policy With Floating Exchange Rates and Perfect Capital Mobility

    LM

    i*
    Interest Rate

    BB

    IS0

    Y*
    GDP
    Figure 29.5 Fiscal Policy With Floating Exchange Rates and Perfect Capital Mobility

    LM

    i*
    Interest Rate

    BB

    2
    IS1

    IS0

    Y*
    GDP

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