Suppose, Under Fixed Exchange Rates, You Find Evidence of Sterilization

question 1

Essay

Suppose, under fixed exchange rates, you find evidence of sterilization. What does it mean regarding the ability of central banks to follow independent monetary policies? What does sterilization imply regarding the causality between domestic credit and reserve flows under fixed exchange rates?

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Definitions:

Gastroenterologist

A medical doctor specialized in diagnosing and treating diseases of the gastrointestinal tract, which includes the stomach, intestines, and associated organs.

Gerontologist

A specialist who studies the aging process.

Allergist

A medical specialist focused on diagnosing and treating allergies and related diseases.

Cardiologist

A medical doctor specialized in diagnosing and treating diseases and conditions of the cardiovascular system.