oussama94
05-29-2017, 00:01
Very few economists solely stand by
this model anymore since it does not take into account trade flows and *******
flows. For example, throughout 2002 the United Kingdom had higher
interest rates, growth rates, and inflation rates than both the United States
and the European Union, yet the pound appreciated in value against boththe dollar and the euro. Indeed, the monetary model has greatly struggled
since the dawn of freely floating currencies. The model holds that high interest
rates signal growing inflation, which they often do, followed by a
depreciating currency. But this does not take into account the ******* in-
flows that would take effect as a result of higher interest yields or of an
equity market that may be thriving in a booming economy—thus causing
the currency to possibly appreciate
this model anymore since it does not take into account trade flows and *******
flows. For example, throughout 2002 the United Kingdom had higher
interest rates, growth rates, and inflation rates than both the United States
and the European Union, yet the pound appreciated in value against boththe dollar and the euro. Indeed, the monetary model has greatly struggled
since the dawn of freely floating currencies. The model holds that high interest
rates signal growing inflation, which they often do, followed by a
depreciating currency. But this does not take into account the ******* in-
flows that would take effect as a result of higher interest yields or of an
equity market that may be thriving in a booming economy—thus causing
the currency to possibly appreciate