Influence of Exchange Rate regime on Effectiveness of Monetary Policy Essay

Influence of Exchange Rate regime on Effectiveness of Monetary Policy - Essay Example According to Cespedes, Chang & Velasco (2002, p. 1), â€Å"this kind of a model treats the financial markets and international capital mobility as perfect.† Therefore, by using this model to explain the effectiveness of a monetary policy, we would be making an assumption that capital mobility and financial markets are perfect. A country can apply either a fixed exchange rate regime or a flexible exchange rate regime in its monetary system. These two regimes differ both in their characteristics and in applicability. Unlike a flexible regime, a fixed regime has an automatic monetary policy response that the monetary institution has little influence on (Klein & Shambaugh 2010). However, they both define how the currency of a country exchanges with currencies of other countries. According to IMF (1988), exchange rates influence capital flow in and out of the country. Therefore, since the exchange rate regime adapted would influence the exchange rates then it would influence the ca pital flow in and out of the country. A monetary policy affects the money market of a country. This type of policy is crucial in finding a solution to economic problems. Its basis is the supply of money rather than the terms and rates of trade (Jain & Khanna 2007). Therefore, the monetary institutions design this kind of a policy to control either the amount of currency in circulation or the cost of a currency relative to currencies of other nations. However, in controlling the amount of currency in circulation and cost of a currency, the policy should control the terms and rate of a trade in a country. That is now where the issue of the effectiveness of a policy comes from. An effective monetary policy is one that has the capacity to control terms and rates of trade thus controlling the economy of the country. The three lines in the IS-LM BP model are the open IS curve, the open LM curve and the BP curve (Chamberlin & Yueh 2006). Although we use the word ‘curve’ to men tion them, in a diagram they are represented as straight lines. We can use this kind of a model for different purposes one of them being the analysis of a policy. When we use this model to analyze a policy, each of these curves would represent a different aspect of the policy that can identify its effectiveness. In this case, what we would be interested in is the intersection point of the lines in the model. Below is an illustration of this type of a model retrieved from the internet. Diagram of the IS-LM BP model (Deardorff 2010, p. 1) Each line in the diagram above is a representation of an aspect of a monetary policy that we aim to analyze. We can observe from the diagram that all the three curves intersect at one point called the equilibrium point. We can use these lines to explain how a monetary policy affects the economic activities of a country and thus draw a conclusion of its effectiveness. According to Furstenberg (1984), international exchange of national money and moneta ry equilibrium are the main causes of the effectiveness of monetary policy. We could use the IS-LM BP model to represent and interpret these aspects of the monetary policy. The intersection of all the curves in the model represent the monetary equilibrium while each of the curves represent an aspect of international exchange of national money. The nature of the curves, its shifts, and their point of intersection depend on the

Legal Policies and Procedures to Refer a Student with a Perceived Essay

Legal Policies and Procedures to Refer a Student with a Perceived Impairment for Evaluation - Essay Example The assessments that are done and the parental meetings between school administrations and the family are a central part of helping children gain a good and solid educational experience. The conclusion defines that without the implementation of IDEA many years ago there would still be many children missing out on the right to learn in a public environment. It also concludes that although there are still many issues that need to be worked out it is a positive influence in the educational system and does make a difference for many special needs children and the families. IDEA was first initiated in 1975 in order to provide all children the right to a public education in the United States (Department of Education 1997). The history can relatively speak for itself because before IDEA's implementation into the educational system there was no place for special needs children and they were left shut out of the school system. Research defines the approximate percentage of young people who were facing disclusion to have been at 1 million and then another 100,000 did not receive the appropriate services that they desperately needed (Department of Education 1997). ... Now those with learning disabilities and other special needs have excelled in the public schooling environment and have gone on to colleges and universities all around the world. They have definitely surpassed what legislators and other policy makers had ever thought they had the ability of achieving so these are all very positive things. When a truly in-depth comparison is done one can see how way back in the seventies when children were often housed in institutions, today they have made great strides. Today, three times the number of children that were in those state institutions have developed the knowledge and social skills to be able to go on to college and many people with several disabilities now have opportunities to work in public environments where beforehand they did not (Department of Education 1997). Obviously it is remarkable how certain policies and specialized programs can make a difference in thousands of people's lives. The Six Key Components of the Original IDEA When President Ford initially signed this program into the United States Educational system there existed six original components of it that laid out the strategic framework and clearly defined eligibility and other requirements that were a fundamental part of it (Associated Content 2006). The first section of the 1975 IDEA act was titled, "Entitlements and Allocations" (Associated Content 2006). This area was meant to bring about a way to implement the program into the system in the most logical fashion possible. Many of those that had been involved with the induction of this program had to work to find ways to bring cohesion into the public school system utilizing a humanitarian proposal that allowed for all students