international monetary economics 6

Question example:

1. Using the model of contingent commitment, show how a simulttaneous devaluation and rise in the risk premium could lead to a scenario

2. Prio to breaking the peg, the Mexican central bank issued dollar denominated debt, which it used to buy Mexican pesos. What would you expect the impack of this type of transaction to be on M, R, B for the central bank’s balance sheet? To backing ratio?