BP Curve Economics: The BP Schedule Explained
The BP curve in economics traces every output and interest-rate pairing at which the external accounts balance, sloping upward because...
Open Economy Macroeconomics
Capital Mobility Open Economy: BP Curve and Policy
Capital mobility in an open economy sets the slope of the BP curve, which decides whether fiscal or monetary policy...
Floating Exchange Rates Mundell-Fleming: Policy Under a Float
Floating exchange rates in Mundell-Fleming make monetary policy powerful and fiscal policy ineffective, because the free currency, not reserves, adjusts...
Fixed Exchange Rates Mundell-Fleming: Policy Under a Peg
Fixed exchange rates in Mundell-Fleming make fiscal policy powerful and monetary policy ineffective, because defending the peg ties the money...
IS-LM-BP Model: Open Economy Equilibrium Diagram
The IS-LM-BP model adds a balance-of-payments curve to the IS-LM diagram, showing how goods, money, and external markets meet at...
Inflation Pass-Through Exchange Rates: How Currency Moves Reach Domestic Prices
Inflation pass-through exchange rates explains how currency depreciation moves through import prices, producer costs, consumer inflation, and expectations.
Balassa-Samuelson Effect: Why Rich Countries Have Higher Prices
The Balassa-Samuelson effect explains why prices are systematically higher in rich countries by linking tradable productivity gains to economy-wide wage...
Dornbusch Overshooting Model: Why Exchange Rates Overshoot
The dornbusch overshooting model proves that sticky goods prices and flexible financial markets force exchange rates to depreciate beyond long-run...