Fiscal policy abroad .
An increase in the tax burden abroad leads to a decrease in the amount of savings and S-I . This causes an increase in the world interest rate , which leads to the outflow of capital from the country and a decrease in investments . In turn, this leads to a decrease in the real exchange rate and an increase in net exports (NX) .
The impact of investment demand and foreign trade policy on the real exchange rate
NX
NX ( )
SI 2
SI 1
NX 2
NX 1
2
1
NX
NX ( ) 2
SI
NX
2
1
NX ( ) 1
Changes in investment demand .
If the demand for investment in one's country increases, the amount of investment (I) increases , and the value of SI decreases . This leads to an increase in the real exchange rate and a decrease in net exports NX .
The impact of foreign trade policy .
The introduction of tariffs will shift the NX(e) curve up and only lead to an increase in the real exchange rate , because the increase in the real exchange rate cancels out the decrease in imports due to the introduction of tariffs .
Do'stlaringiz bilan baham: |
