Please help me with these question. Thank you 1. Many countries experiencing high and rising inflation, or even hyperinflation, will adopt afixed exchange rate regime. Discuss the potential costs and benefits of a fixed exchange rateregime in this case. Comment on fiscal discipline, seigniorage, and expected future inflation. 2. In the late 1970s, several countries in Latin America, notably Mexico, Brazil, and Argentina,had accumulated large external debt burdens. A significant share of this debt wasdenominated in U.S. dollars. The United States pursued contractionary monetary policy from1979 to 1982, raising dollar interest rates. How would this affect the value of the LatinAmerican currencies relative to the U.S. dollar? How would this affect their external debt inlocal currency terms? If these countries had wanted to prevent a change in their external debt,what would have been the appropriate policy response, and what would be the drawbacks? 3. The economic costs of currency crises appear to be larger in emerging markets anddeveloping countries than they are in advanced countries. Discuss why this is the case,making reference to the interaction between the currency crisis and the financial sector. Inwhat ways do currency crises lead to banking crises in these countries? In what ways dobanking crises spark currency crises?
Please help me with these question. Thank you
1. Many countries experiencing high and rising inflation, or even hyperinflation, will adopt a
fixed exchange rate regime. Discuss the potential costs and benefits of a fixed exchange rate
regime in this case. Comment on fiscal discipline, seigniorage, and expected future inflation.
2. In the late 1970s, several countries in Latin America, notably Mexico, Brazil, and Argentina,
had accumulated large external debt burdens. A significant share of this debt was
denominated in U.S. dollars. The United States pursued contractionary
1979 to 1982, raising dollar interest rates. How would this affect the value of the Latin
American currencies relative to the U.S. dollar? How would this affect their external debt in
local currency terms? If these countries had wanted to prevent a change in their external debt,
what would have been the appropriate policy response, and what would be the drawbacks?
3. The economic costs of currency crises appear to be larger in emerging markets and
developing countries than they are in advanced countries. Discuss why this is the case,
making reference to the interaction between the currency crisis and the financial sector. In
what ways do currency crises lead to banking crises in these countries? In what ways do
banking crises spark currency crises?
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