Solution-What if the crawling peg is not fully credible

What if the crawling peg is not fully credible

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Suppose an economy open to international capital movements has a crawling peg exchange rate under which its currency is pegged at each moment but is continuously devalued at a rate of 10 percent per year. How would the domestic nominal interest rate be related to the foreign nominal interest rate? What if the crawling peg is not fully credible?

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What if the crawling peg is not fully credible

Reference no: EM13868929

Reference no: EM13868929

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