Mundell-Fleming Model | Open Economy Macroeconomics

In this lecture, I present the central workhorse model of open economy macroeconomics: the Mundell-Fleming model. I first explain the three equations of which it consists (IS curve, LM curve, and IP curve) and then depict the model graphically. Finally, I use the model to analyze the effects of contractionary monetary policy, expansionary fiscal policy, and of a policy mix of contractionary modetary policy combined with expansionary fiscal policy. For the full Intermediate Macroeconomics Cource, please see the following lectures:    • Goods Market | Macroeconomics      • Multiplier Effect | Macroeconomics      • IS Curve | Macroeconomics      • Movements Along the Curve or Shifts of the...      • Money Market | Macroeconomics      • LM Curve | Macroeconomics      • IS-LM Model | Macroeconomics      • Labor Market | Macroeconomics      • Phillips Curve | Macroeconomics      • IS-LM-PC Model | Macroeconomics      • Exchange Rates | Open Economy Macroeconomics      • Purchasing Power Parity | Open Economy Mac...      • Interest Rate Parity | Open Economy Macroe...      • Goods Market in the Open Economy | Open Ec...      • Fiscal Policy and the Multiplier in the Op...      • Increases in Foreign Demand | Open Economy...      • Effects of a Currency Depreciation | Open ...      • Reducing the Trade Deficit | Open Economy ...      • Marshall-Lerner Condition | Open Economy M...      • Mundell-Fleming Model | Open Economy Macro...      • Solow Model      • Solow Model With Technological Progress