Simultaneous Equilibrium in Commodity and Money Markets of an Open Economy- Mundell-Fleming Model
This video explains the determination of equilibrium level of aggregate demand and rate of interest in an open economy characterized by perfect capital mobility. Moreover, this video explains the effectiveness of fiscal and monetary policies to ensure full employment equilibrium both under fixed and flexible exchange rate regimes.
Suggested Reading - Rivera Batiz, F.L. and Rivera Batiz L (1994). International Finance and Open Economy Macroeconomics (2nd Ed), Macmillan Publication co. Chapter-6, 7
