CFA Level 2 | Economics: The Mundell-Fleming Model

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CFA Level 2
Topic: Economics
Reading: Currency Exchange Rates: Understanding Equilibrium Value
The Mundell-Fleming model describes how changes in monetary and fiscal policy affect interest rates and economic activity, which in turn leads to changes in capital and trade flows, eventually affecting the exchange rate.
A key is to establish whether capital mobility is high or low before we look at the combination of the fiscal & monetary policies (expansionary/restrictive).
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[@naagy9723]

This is the only clear explanation I found on the Internet about the Mundell-Fleming model. Thank you!

[@FabianMoa]

You're welcome, Naagy!

[@stanleysolagah5492]

This is my favorite instructor for CFA level 2.. I keep looking for every video he created on the CFA.. The guy is just something else. He is too simple in his approach.. I always laugh 😆 when I watch his videos because I’m shocked about the manner of simplicity and insights he exhibits.. You are my man !!

[@mauriciobonaguro5431]

I can't stop coming back to this video as my main reference source for the Mundell-Fleming model. None of the big prep providers or the institute managed to explain it so clearly as Fabian. Kudos to him, again!

[@sarahli345]

Thank you! Made the complex become simple

[@FabianMoa]

Glad it helped!

[@flamedomegamer537]

What and amazing way of explaining I was struggling with this concept but now it's clear, please make a video on IS LM model too

[@harveerbrar6298]

Great and very easy way explanation

[@joseignacioporfirioordonez9403]

Insane explanation!

[@FabianMoa]

Thanks, Jose! 👍

[@reubenchucks6234]

Dear Fabian, how you make Level 2 concepts simplified is very amazing! Could you help make a video on Derivatives especially how to calculate Quoted futures and cheapest to deliver? That section gives me pains to understand. Thank you.

[@xuejiaofeng8277]

Great logic to remember. Do you share the lectures ? If so, can you tell me the website or any download link? THX !

[@alexpouhe6290]

Thank you for this explanation. I guess, even though not mentioned, this case concerns an economy with a flexible exchange rate regime. What is the situation of a fixed exchange rate regime ?

[@FabianMoa]

Hi Alex, In the case of a fixed exchange rate regime, the central bank will counteract the movement in the domestic currency. If the domestic currency devalues, then the central bank will sell foreign currency, and buy domestic currency to bring it up. If the domestic currency appreciates, then the central bank will buy foreign currency, and sell domestic currency to bring it down. Then there may be sterilized intervention to prevent the monetary base from changing.

[@bringinthedough7486]

Great explanation

[@FabianMoa]

Glad you liked it

[@flamedomegamer537]

They ask questions about what will be impact of fiscal and monetary policy on current account and Capital account with fix and flexible exchange rate, or super confusing that how to Check these effects 🤔

[@ntcuong01ct1]

Dear friends, I have a few questions: 1 / As far as I understand, the government will administer and issue policies to regulate and stimulate the economy, while the home bank first takes care of money and policy. fiscal year. So have these two agencies ever had opposite goals? 2 / Every country needs a moderate inflation rate to stimulate the economy. So what causes the inflation rate case more than 40% ?, How to fix the government and the state bank ?. 3 / If a country has no resources, an aging population, and a low fertility rate (eg Japan), how can the government promote GDP growth? 4 / The relationship between inflation and GDP growth ?. 5 / Government has too high public debt, how to reduce public debt? 6 / Which indicators does the government use to evaluate the efficiency of public investment of the state?

[@stanleysolagah5492]

This is my favorite instructor for CFA level 2.. I keep looking for every video he created on the CFA.. The guy is just something else. He is too simple in his approach.. I always laugh 😆 when I watch his videos because I’m shocked about the manner of simplicity and insights he exhibits.. You are my man !!

[@FabianMoa]

Thanks, Stanley! I like to simplify the concepts and I'm happy to hear that I have been able to do that in my videos. Cheers

[@nithyalinishankar3818]

Great explanation

[@FabianMoa]

Glad it was helpful! Remember to subscribe to my channel for more educational content.

[@noobmaster-dm7tu]

Ok anna