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The Mundell-Fleming Model

Giancarlo Gandolfo

Chapter 10 in International Finance and Open-Economy Macroeconomics, 2016, pp 191-220 from Springer

Abstract: Abstract The analysis carried out in the previous chapters was concerned with the “real” side of the economy and the balance of payments, as only the market for goods and services and the relative international flows (the current account) were considered. The introduction of monetary equilibrium, interest rates, and international flows of capital was first carried out through the extension to an open economy of the closed-economy Keynesian model as synthesized by Hicks (Econometrica, 5, 147–159, 1937; reprinted in: J.R. Hicks (1967). Critical essays in monetary theory, Chap. 7 Oxford: Oxford University Press) in the IS–LM analysis. This extension was accomplished by Mundell and Fleming in the early 1960s.The Mundell-Fleming model has important policy implications, which were treated together with the description of the model in the original writings of the two authors. For didactic purposes we shall separate the descriptive and normative aspects. The policy implications of the model will be considered in the next chapter.

Keywords: Exchange Rate; Interest Rate; Real Exchange Rate; Money Supply; Excess Demand (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-662-49862-0_10

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DOI: 10.1007/978-3-662-49862-0_10

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