International economic relations
1) open Economies :
They are the economies that entertain relationships trade them with other countries.
2) Balance of payments:
It is the recording of the transactions of the residents in a country with the rest of the world, it is divided R-on account understood them and checking account.
3) running Conto :
It records the commerce in goods and services and the payments for transfers.
4) Conto understood them :
It records the purchases and the sales of activity real financial institutions and as it sets in action, obligations, lands.
5) Deficit of checking account:
The country has spold to the foreign country more than how much it has gained from the sales to the rest of the world.
6) fundamental Rule of the international payments:
The foreign accounts must be in balancing therefore if a country has spold more than how much it could must sell activity or then be become indebted to the foreign country that it implies a remainder of the capital account them. The relation is therefore :
Balance of capital account them Balance of checking account = 0
7) total Remainder of the balance of payments:
Total balance della balance goddesses payments = variation delle official reservoirs = Balance of capital account them Balance of checking account
8) System of fixed changes :
In a system of fixed changes the central banks them are ready to acquire and to sell their currencies to a fixed price in terms of other currencies.
9) System of flexible changes :
In a system of flexible changes the central banks leave them that the exchange rate is fixed so as to to equal the tender offer of foreign currency.
10) Devaluation :
In a system of fixed rates, the price of foreign currencies comes increased with an official participation.
11) Depreciation :
An currency is deprezzata when in condition of flexible rates, it becomes less expensive in terms than foreign currency.
12) bilateral nominal Exchange rate :
Draft of exchange rates between one currency and an other.
13) multilateral or effective Exchange rate:
It is the price of a representative foreign currency basket, ciascuna weighted second the importance of every country in the foreign trade of the reference country.
14) real Exchange rate:
It is the relationship between the level of the foreign prices and those of the country taken like reference expressed in the same currency
Being : P = prices interni Pf = Prices esteri e = nominal exchange rate
If for a data R country it increases, will be more convenient for the foreign countries to buy of the assets from produced it.
If instead R increases then for the citizens it is more convenient to acquire assets produced from other countries.
15) On what the clean exports depend:
to) from the national yield
b) from the foreign yield
c) from the real exchange rate
16) marginal Propensione to import:
It is the increment of the question of assets imports caused to you from a unitary increment of the yield.
17) Effects of repercussion:
A country in expansion determines that also the countries with which it it trades expand.
18) Effects on the balance of payments of one lessening of the inner rates:
The remainder budgetary in how much is reduced the understood one them goes to invest to the foreign country.
19) external Equilibrium:
The balance of payments is nearly in balancing.
20) inner Equilibrium:
The product is found to the level of full employment.
21) Model of Mundell Fleming:
It is the analysis that extends the use of model IS-LM to the economy opened with perfect mobility of the understood one them.
The analysis is carried out is in regimen of flexible changes that in regimen of fixed changes.
22) Effect of the monetary policy in a regimen of fixed changes in the case of perfect mobility of the capitali:
The effect of the monetary policy is null, in fact it is supposed that the central bank carries out them monetary grip with the consequence to raise the rates, free mobility of the understood one them infinitely concurs a flow of understood them towards the inside, that it pushes towards an appreciation of the change, the central bank them it must therefore acquire foreign currency in order to maintain the change fixed, increases the currency stock and therefore a monetary expansion has place that reduces the rates bringing back them to the level of equilibrium.
23) Effect of the fiscal policy in a regimen of fixed changes in the case of perfect mobility of the capitali:
One expansive fiscal policy raises curve IS and therefore also the interest rates and the production, the high interest rates recall a flow of understood them infinitely that it pushes towards an appreciation of the change, the central bank them in order to maintain it fixed acquire foreign currency, increasing in such a way the currency stock and therefore a monetary expansion has place that Moves the LM to right, bringing back the interest rate to the level of equilibrium while the production is increased.
24) Effect of the fiscal policy in a regimen of flexible changes in the case of perfect mobility of the capitali:
One expansive fiscal policy raises curve IS and therefore also the interest rates and the production, the high interest rates recall a flow of understood them that it pushes towards an appreciation of the change, therefore to a reduction of the exports infinitely and consequently the IS returns in the departure position therefore the effect of the fiscal policy on the production is null while it determines an appreciation of the exchange rate.
25) Effect of the monetary policy in a regimen of flexible changes in the case of perfect mobility of the capitali:
One expansive monetary policy moves the LM to right more low determining a interest rate regarding the foreign rates and a consequent outflow of the understood one them towards the foreign country with consequent depreciation of the exchange rate, increases therefore to the competitiveness of the country and with it the production moving to right curve IS.