Internatioanal Finance
W2411 – International Economics: International Finance
SoSe 2013 Jungblut
Participation Assignment Ju
Exercise 1 Go to the web page of the European Central Bank (ECB).
Point(s) 2,5
a. What is the current (fixed) rate for main refinancing operations”? 0,50% Download the Monthly Bulletin April 2013, open section “Euro Area Overview” in the statistical appendix, and list the following values (look out for correct year!): b. Net current and capital accounts balance in 2012 (billion EUR) c. Reserve assets 2012 (end-of period position, billion EUR) d. Net international investment position in 2011 (% of GDP) e. Gross external debt 2011 (% of GDP)
123,9
689,4
-14,0
117,1
1
Exercise 2
Point(s) 2
Go to the webpage of the Board of Governors of the Federal Reserve System. Select the section “News & Events” and open the “Federal Reserve issues FOMC Statement” from May1, 2013. a. What decision did the Committee take regarding the target range for the federal funds rate?
The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent
b. For how long does the Federal Reserve consider this level as appropriate?
The federal reserve consider this level as appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.
Exercise 3
Point(s) 2
Suppose, inflation expectations for the US and Europe are roughly the same and at about 2%. a. What expected rate of depreciation for the US-Dollar/Euro exchange rate (������$/€ ) does the monetary model of the exchange rate imply? %
0
b. Take answers 1.a, 2.a, and 3.a together. According to these values, the UIRP does not hold in its simplest form. What could be the reason?
The reason might be that there is always risk premium.
SoSe 2013 Jungblut
Participation Assignment Ju
Exercise 1 Go to the web page of the European Central Bank (ECB).
Point(s) 2,5
a. What is the current (fixed) rate for main refinancing operations”? 0,50% Download the Monthly Bulletin April 2013, open section “Euro Area Overview” in the statistical appendix, and list the following values (look out for correct year!): b. Net current and capital accounts balance in 2012 (billion EUR) c. Reserve assets 2012 (end-of period position, billion EUR) d. Net international investment position in 2011 (% of GDP) e. Gross external debt 2011 (% of GDP)
123,9
689,4
-14,0
117,1
1
Exercise 2
Point(s) 2
Go to the webpage of the Board of Governors of the Federal Reserve System. Select the section “News & Events” and open the “Federal Reserve issues FOMC Statement” from May1, 2013. a. What decision did the Committee take regarding the target range for the federal funds rate?
The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent
b. For how long does the Federal Reserve consider this level as appropriate?
The federal reserve consider this level as appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.
Exercise 3
Point(s) 2
Suppose, inflation expectations for the US and Europe are roughly the same and at about 2%. a. What expected rate of depreciation for the US-Dollar/Euro exchange rate (������$/€ ) does the monetary model of the exchange rate imply? %
0
b. Take answers 1.a, 2.a, and 3.a together. According to these values, the UIRP does not hold in its simplest form. What could be the reason?
The reason might be that there is always risk premium.