Silly mnemonic for Mundel-Fleming Model?

CFA Level II Economics
#1

Anyone have a silly mnemonic for remembering the Mundel-Fleming model?

Currency Appreciates:

  • Expansionary Fiscal Policy (Raises interest rates, capital inflows)
  • Restrictive Monetary Policy

Currency Depreciation:

  • Restrictive Fiscal Policy
  • Expansionary Monetary Policy (Lower interest rates, capital outflows)

With Low capital mobility:

  • Both EXPANSIONARY = Currency Depreciation
  • Both RESTRICTIVE = Currency Appreciation

All i can really come up with is that Low capital mobility makes things opposite so expansionary leads to depreciation. And that Currency appreciation in high mobility is when its in alphabetic order, Expansionary Fiscal, not Restrictive Fiscal

Doubt this will hold up or be recalled during test time though… someone have something “cheekier” ?

#2

I think you have it wrong or I’m misunderstanding you.

The low mobility doesn’t make it opposite … it just makes the appreciation or depreciation uncertain. The easiest thing is to remember that monetary policy expands means currency depreciation either through high mobility or low mobility, but never appreciates currency. And vice verse with monetary restrictive policy … can only lead to appreciate.

Mon Policy / Fisal Policy / High Mobility / Low Mobility

Expand / Expand ----> Uncertain / Depreciate Expand / Restrict -----> Depreciate / Uncertain Restrict / Expand -----> Appreciate / Uncertain Restrct / Restrict ----> Uncertain / Appreciate