Thursday, November 8, 2007
Today in class we did the basic analytics of exchange rate determination as one more application of demand - supply analysis. It's not the easiest stuff but our simple theoretical framework can explain the basics and there is a lot going on now in the world with the US dollar.
I also mentioned that there are zillios of articles, blog posts, papers on this issue available by clicking your mouse. I just checked out the NYT and it's leading with exactly the issue:
Markets and Dollar Sink as Slowdown Fear Increases
Krugman in his blog has a theoretical model (not accessible to read - perhaps just bits and pieces) and another model (you probably noticed) related to the issue. A note to my male students: the second model is also not accessible but for different reasons....