oussama94
05-28-2017, 23:59
Indeed, it is in the area of excessive expansionary monetary policy that
the monetary model is most successful. One of the few ways a country can
keep its currency from sharply devaluing is by pursuing a tight monetary
policy. For example, during the Asian currency crisis the Hong Kong dollar
came under attack from speculators. Hong Kong officials raised interest
rates to 300 percent to halt the Hong Kong dollar from being dislodged
from its peg to the U.S. dollar. The tactic worked perfectly as speculators
were cleared out by such sky-high interest rates. The downside was the
danger that the Hong Kong economy would slide into recession. But in the
end the peg held and the monetary model worked
the monetary model is most successful. One of the few ways a country can
keep its currency from sharply devaluing is by pursuing a tight monetary
policy. For example, during the Asian currency crisis the Hong Kong dollar
came under attack from speculators. Hong Kong officials raised interest
rates to 300 percent to halt the Hong Kong dollar from being dislodged
from its peg to the U.S. dollar. The tactic worked perfectly as speculators
were cleared out by such sky-high interest rates. The downside was the
danger that the Hong Kong economy would slide into recession. But in the
end the peg held and the monetary model worked