Capital Based Macroeconomic model and 100 percent reserve system, free banking system and BFH system: A Comparism among Latvia, Lithuania, Kazakhstan, and Kyrgyzstan.

Abstract

This essay extends the capital based macroeconomic theory to include international capital flow thus extending it to an open economy and analyze it in the context of the BFH system, Free banking system and 100 percent reserve ration. In all these, it was noticed that interest rate will barely change even though the possibility of interest rate changes was not ruled out completely. A test of these systems was conducted on Latvia, Lithuanian, Kazakhstan and Kyrgyzstan and was successful. However, it must be noted that these are just prepositions as these system are not in place at the moment. In furtherance to this, past and present monetary system used by the countries exhibited similarities to these systems, even though difference could largely be seen.International Capital Flows: Interest rate: 100 percent reserve system: free banking system: BFH system