Why country that wishes to have independent monetary policy

Reference no: EM131917725

Problem

1. If financial capital is relatively mobile between countries, what difficulties emerge if the various countries have different interest rate targets for attaining domestic inflation and/or growth objectives? (Assume fixed exchange rates.)

2. Explain why a country that wishes to have an independent monetary policy as well as a fixed exchange rate would have to institute controls on capital flows into and out of the country in order to accomplish these two objectives.

Reference no: EM131917725

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