Explain the advantages and disadvantages for a small open economy country to peg its currency to the US dollar. Are there any circumstances in which a small open economy country might abandon the peg and allow the currency to float against the US dollar? In your opinion, what would be the economic consequences of such a decision on the small open economy of the country?

Explain the advantages and disadvantages for a small open economy country to peg its currency to the US dollar. Are there any circumstances in which a small open economy country might abandon the peg and allow the currency to float against the US dollar? In your opinion, what would be the economic consequences of such a decision on the small open economy of the country?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter19: The International Monetary System: Order Or Disorder

Section: Chapter Questions

Problem 1DQ

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