FoundationsofInternationalMacroeconomics1

Workbook2

MauriceObstfeld,KennethRogo ,andGitaGopinath

Chapter9Solutions

1.(a)Intheproblem,thegovernmentunexpectedlyfreezesthemoneysupply,whichhadpreviouslybeengrowingpredictablyattheproportionalrateµ,atthepreviousperiod’slevelsay.Sincetheeconomywasinitiallyinasteadystate,wehavethatp0=+(1+η)µ,which,togetherwitheq.

(12)inChapter9,impliesthat

q0=e0 (1+η)µ.(1)

(Recallthati ,p ≡0.Thisproblemdi ersfromtheoneinsection9.2.5inthathere,thereisaforecasterrorinthelevelofthedate0moneysupply,whereasinthechapter,thereisnosurpriseconcerningthedate0moneysupply.)Letusreproduceeq.(18)fromChapter9(whichassumesaconstantlong-runrealexchangerate):

et eflex=t1 φδ(qt .1+ψδη

Fort=0,wemayuseeq.(1)toeliminateq0fromtheprecedingequation:

e0 eflex=0

11 φδ[e0 (1+η)µ .1+ψδηByMauriceObstfeld(UniversityofCalifornia,Berkeley)andKennethRogo (Prince-

cMITPress,1996.tonUniversity).°

2c°MITPress,1998.Version1.1,February27,1998.Foronlineupdatesandcorrec-tions,seewww.wendangwang.com Book.html

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