fiscal - current account deficit and financial account surplus and currency - mixed monetary- current account deficit and financial account deficit and currency - depreciation is there a difference between short term and long term?
is this true for short term or long term or both?
monetary in the short term, rates decrease, financial acct down, current acct up, currency decreases, exports go up, imports go down monetary long term (Price effects) - prices go up, imports go up, exports go down, current acct goes down, financial acct goes up, currency decreases both in short and long-term
Fiscal Policy stimulus Short term- Rates up, Financial acct up (because we are attracting more capital), current acct down, currency up, exports down, imports up. Fisical Policy long term price effects- Prices up, financial acct up, current acct down, currency down, imports up, exports down.
With Regards to Fiscal Policy LT, if currency depreciates, shouldn’t that encourage exports and therefore we have a positive current account. Appreciate your feedback.