Le modèle Mundell-Fleming: Au cœur de la macroéconomie internationale ( Culture économique t. 7) (French Edition) – Kindle edition by Jean Blaise Mimbang. 17 juil. traditionnel de Mundell-Fleming a ensuite souligné la dichotomie . () a par exemple proposé récemment, le critère d’homogénéité des. View Notes – Chapitre 4 – from ECONOMIE at Université de Nantes. Modle de Mundell-Fleming IS-LM en conomie ouverte A partir du modle de.
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The accommodated monetary outflows exactly offset the intended rise in the domestic money supply, completely offsetting the tendency of the LM curve to shift to the right, and the interest rate remains equal to the world rate of interest.
Thus, a monetary expansion, in the short run, does not necessarily improve the trade balance. The Mundell—Fleming model applied to a small open economy facing perfect capital mobility, in which the domestic interest rate munvell exogenously determined by the world interest rate, shows stark differences from the closed economy model.
In a system of fixed exchange rates, central re announce an exchange rate the parity rate at which they are prepared rleming buy or sell any amount of domestic currency.
Higher disposable income or a lower real interest rate nominal interest rate minus expected inflation leads to higher consumption spending. Under flexible exchange ratesthe exchange rate is the third endogenous variable while BoP is set equal to zero. To maintain the exchange rate and eliminate pressure on it, the molde authority purchases foreign currency using domestic funds in order to flfming the LM curve to the right.
Higher domestic income GDP leads to more spending on mundekl and hence lower net exports; higher foreign income leads to higher spending by foreigners on the country’s exports and thus higher net exports. In this graph, under less than perfect capital mobility the positions of both the IS curve and the BoP curve depend on the exchange rate as discussed belowsince the IS-LM graph is actually a two-dimensional cross-section of a three-dimensional space involving all of the interest rate, income, and the exchange rate.
In the IS-LM model, the domestic interest rate is a key component in keeping both the money market and the goods market in equilibrium.
Therefore, the rise in government spending will have no effect on the national GDP or interest rate. The inflow of money causes the LM curve to shift to the right, and the domestic interest rate becomes lower as low as the world interest rate if there is perfect capital mobility.
Mundell–Fleming model – Wikipedia
nodle The shift results foeming an incipient rise in the interest rate, and hence upward pressure on the exchange rate value of the domestic currency as foreign funds start to flow in, attracted by the higher interest rate. In the closed economy model, if the central bank expands the money supply the LM curve shifts out, and as a result income goes up and the domestic interest rate goes down. This keeps the domestic currency’s exchange rate at its targeted level. The Mundell—Fleming model under a fixed exchange rate regime also has completely different implications from those of the closed modlle IS-LM model.
Higher lagged income or a lower real interest rate leads to higher investment spending. This depreciates the local currency and boosts net exports, shifting the IS curve to the right.
He adds that, in the short run, fiscal policy works because it raises interest rates and the velocity of money. This page was last edited on 7 Novemberat Under both types of exchange rate regime, the nominal domestic money supply M is exogenous, but for different reasons.
The Mundell—Fleming model has been used to argue that an economy cannot simultaneously maintain a fixed exchange ratefree capital movementand an independent monetary policy. The IS curve is downward sloped and the LM curve is upward sloped, as in the closed economy IS-LM analysis; the BoP curve is upward sloped unless there is perfect capital mobility, in which case it is horizontal at the level of the world interest rate.
Canadian Journal of Economic and Political Science. Views Read Edit View history. That being said, capital outflow will increase which will lead to a decrease in the real exchange rate, ultimately shifting the IS curve right until interest rates equal global interest rates assuming horizontal BOP. Basic assumptions of the model are as follows: But in the Mundell—Fleming open economy model with perfect capital mobility, monetary policy becomes ineffective. Results for a large munddll economy, on the other hand, can be consistent with those predicted by the IS-LM model.
This will mean that domestic interest rates and GDP rise. After the subsequent equations are substituted into the first three equations above, one has a system of three equations in three unknowns, two of which are GDP and the domestic interest rate. From Wikipedia, the free encyclopedia.
Modèle OG-DG — Wikipédia
A higher e leads to higher net exports. In contrast, under fixed exchange rates e is exogenous and the balance of payments surplus is determined by the model. This directly reduces the local interest rate relative to the global interest rate. This principle is frequently called the ” impossible trinity ,” “unholy trinity,” “irreconcilable trinity,” “inconsistent trinity,” policy trilemma,” or the “Mundell—Fleming trilemma.
An increase in the global interest rate shifts the BoP curve upward and causes capital flows out of the local economy. Mundell’s paper suggests that the model can be applied to Zurich, Brussels and so on.
The decrease in the money supply resulting from the outflow, shifts the LM curve to the left until it intersect the IS and BoP curves at their intersection. The BoP curve shifts down, foreign money flows in and the home currency is pressured to appreciate, so the central bank offsets the pressure by selling domestic currency equivalently, buying foreign currency.
Sargent Adam Smith Knut Wicksell.
In the very short run the money supply is normally predetermined by the past history of international payments flows. This puts pressure on the home currency to depreciate, so the central bank must buy the moxle currency — that is, sell some of its foreign currency reserves — to accommodate this outflow.