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i need help in relating interest rates with globalisation (1 Viewer)
- Thread starter porkchopz
- Start date
Hmm how globalisation affects interest rates
1) contagion affect - global economy can affect domestic economy so RBA must think 18 months ahead (time lag) for the domestic and global economy
2) interest rate differentials. (needs to be higher than other countries to attract more foreign inflows
3) Globalisation --> increase in competition --> increase in aggregate supply of goods--> fall in prices --> less inflation and thus less monetary pressure ( lower/stable interest rates)
4) converse to 3) as in globalisation means greater spending and increased inflation -->increase in interest rates
5) Globalisation shifts focus to micro-economic policy i wud think- less focus on monetary policy. Hmm although i reckon monetary policy is still important in global economy
Hmm - all i got at the moment
1) contagion affect - global economy can affect domestic economy so RBA must think 18 months ahead (time lag) for the domestic and global economy
2) interest rate differentials. (needs to be higher than other countries to attract more foreign inflows
3) Globalisation --> increase in competition --> increase in aggregate supply of goods--> fall in prices --> less inflation and thus less monetary pressure ( lower/stable interest rates)
4) converse to 3) as in globalisation means greater spending and increased inflation -->increase in interest rates
5) Globalisation shifts focus to micro-economic policy i wud think- less focus on monetary policy. Hmm although i reckon monetary policy is still important in global economy
Hmm - all i got at the moment
rukawasan
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one thing u missed... dopez...
glolisation leads to increased flows of short-term flows of finance or 'hot money' btw countries... which are volatile in nature... n any shift in investor confidence eg 97-99 AFC will induce flows of finance into or out of countries... which consequently affects interst rate
glolisation leads to increased flows of short-term flows of finance or 'hot money' btw countries... which are volatile in nature... n any shift in investor confidence eg 97-99 AFC will induce flows of finance into or out of countries... which consequently affects interst rate
