ECON 346 Applied International Macroeconomics
MAY ASSESSMENT 2021
TIME ALLOWED: Until 24 May 2021, 12:00
INSTRUCTIONS TO CANDIDATES
Student declaration:
I confirm that I have read and understood the University’s Academic Integrity policy.
I confirm that I have acted honestly, ethically and professionally in conduct leading to
assessment for the programme of study. I confirm that I have not copied material from
another source nor committed plagiarism nor fabricated data when completing the
attached piece of work. I confirm that I have not previously presented the work or part
thereof for assessment for another University of Liverpool module. I confirm that I
have not colluded with any other student in the preparation and production of this
work. I confirm that I have not incorporated into this assignment material that has
been submitted by me or any other person in support of a successful application for a
degree of this or any other University or degree awarding body. Students who require
sympathetic marking should ensure that they attach the Sympathetic Marking
Indicator to the first page of the document prior to submission
PAPER CODE …ECON 346 …..
Please answer the question outlined below in no more than 2000 words.
Question 1: Critically reflect on the costs and benefits of exchange rate
independence. For your answer consult Obstfeld (2020) and relate its discussion to
your background knowledge about exchange rates and parity conditions.
How does the economic theory relate to the observed data for interest rates, exchange
rates and inflation rates in Britain and the euro zone? (You may refer to the attached
data for illustration.) Explain your answer.
Maurice Obstfeld (2020) “Harry Johnson’s “Case for Flexible Exchange Rates”—50
Years Later” Peterson Institute for International Economics Working Paper 20-12
PAPER CODE …ECON 346 …..




























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