New Keynesian sticky price open economy model with a flexible exchange rate: a. Explain why fiscal policy is an ineffective stabilization tool. b. Suppose that there is a

MACROECONOMICS
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ISBN:9781337794985
Author:Baumol
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Chapter20: Exchange Rates And The Macroeconomy
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In the New Keynesian sticky price open economy model with a flexible exchange rate: a. Explain why fiscal policy is an ineffective stabilization tool. b. Suppose that there is a reduction in current total factor productivity. What should the central bank do in response?
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