chpt15

Your participation in this discussion is based on your reading of Chapter 15.  In this chapter you learn about the different foreign exchange markets and why smaller nations choose one system versus another.  You also get to understand the importance of foreign currency reserves and international capital controls in a fixed rate system.  Discuss in this week’s forum:

The factors that underlie a nation’s decision to adopt fixed rate system, rather than a floating rate system.  

The reasons why developing countries chose a currency board, or dollarization

The factors that lead to a currency crisis and how devaluation can become a policy tool to regain competitive advantage. Any examples?  Argentina?