GINS 2010 Lecture Notes - Lecture 7: Currency Crisis, Byrsonima Crassifolia, Black Market
16 Dec 2016
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Document Summary
People and rms in all countries trade domestically, and internationally. Crucial distinction between domestic and international trade: domestically, trade is done in local currency; internationally, trade is done in foreign currencies. Foreign direct investments, nancial investments (stock markets, bonds, loans, etc. ) In other words, trade (and investment) bring not only our labour and business conditions together internationally, but also our local currencies. Local currencies matter because they are issued by national governments, usually following exclusively national goals. Providing suf ceint currency to facilitate domestic transactions, saving/investments. Financing government budget de cits (ie. gov prints money to pay its creditors/employees). Displace other forms of payment (servitude, traditional arrangements, barter, etc. ) How does gei in uence our money"s worth? simpli ed examples: If we consume more imported than nationally produces goods, our country"s imports grow. We will need more canadian dollars to pay for each unit. It matters because our exports will increase and this may create a cycle.
