Essays in Macroeconomics of an Open Economy


Book Description

The large aggregates in the economy - consumption, investment, production of the domestic and the international sectors, international capital flows, financial accumulation and indebtedness - are analysed in this book as problems in time-optimisation for enterprises and households. The effects of fiscal and monetary policies along with exchange-rate variation are examined, and their simultaneous use for stabilizing demand are found to be necessary. All household decisions on consumptions, savings, and financial disposition are conditioned by uncertainty, and similarly for firms, who make more complex simultaneous decisions on production, real investment, financing, and market strategy. The marginal efficiency-of-investment function derived from these decisions is fundamentally different from the marginal productivity of capital in the neoclassical sense. An economy which grows through the accumulation of capital, increase in labor supply, and technological progress is the framework in which all of these variables move. This codetermines the allocation of factors between domestic and international production, and the development of foreign trade. The growth both of the public debt and of international investment are treated in depth.




Essays In The Fundamental Theory Of Monetary Economics And Macroeconomics


Book Description

This book provides a comprehensive overview, in the form of eight long essays, of the evolution of monetary theory over the three-quarters of century, from the time of Keynes to the present day. The essays are originally based on lecture notes from a graduate course on Advanced Monetary Economics offered at York University, Toronto, written in the style of academic papers. The essays are mathematical in method — but also take a historical perspective, tracing the evolution of monetary thought through the Keynesian model, the monetarist model, new classical model, etc, up to and including the neo-Wickesellian models of the early 21st century. The book will be an essential resource for both graduate and advanced undergraduate students in economics, as well as for individual researchers seeking basic information on the theoretical background of contemporary debates.




Trade, Growth, and Economic Policy in Open Economies


Book Description

Part 1 of this volume focusses on globalization. Gains from trade, international competitiveness, labour market issues in open economies, customs unions, dumping and intra-firm trade are the topics of this part. Part 2 puts a stronger emphasis on dynamic economics. Social income, intergenerational transfers, public pension systems, and bequest and gift motives in overlapping generation models are main topics. Economic policies are analyzed in Part 3, including the relation between wage rigidity and migration, several aspects of German financial and monetary policy, as well as tax competition. The volume concludes with institutional issues of globalization, a western view on eastern transition, social cost of rent seeking, and the evolution of social institutions.







Credit, Interest Rates and the Open Economy


Book Description

'This book should be on the reading list of every graduate course in monetary economics. The distinguished contributors not only examine and discuss the nature of money and the conduct of monetary policy in a modern credit economy, but also take an historical perspective through the writings of Cassel, Wicksell, Sraffa and Hicks, as well as Keynes and Kaldor, and extend the theory of money endogeneity (or "horizontalism") to the open economy and economic growth. Interested readers have a feast before them.' - A.P. Thirlwall, University of Kent at Canterbury, UK The horizontalist perspective is an extension of the post-Keynesian approach, that has hitherto focused on a theory of credit and money. This book extends horizontalism beyond its traditional boundaries and makes it consistent with the post-Keynesian theories of output and the open economy. The authors compare and contrast the horizontalist position with various orthodox and non-orthodox views on money. They argue that horizontalism is perfectly compatible with liquidity preference, credit constraints, and a flexible interest-rate mark-up, and address recent developments in banking that reinforce the validity of a horizontal schedule of credit-money. The overall intention is to place horizontalism within the current heterodox tradition as a general theory of the creation of money that is consistent with the post-Keynesian view on macroeconomic policy.




Money, Capital Mobility, and Trade


Book Description

Essays by leading economists and scholars reflecting on Mundell's broad influence on modern open-economy macroeconomics.




Essays on Financial Economics and Macroeconomics


Book Description

This thesis, entitled Essays on Financial Economics and Macroeconomics, studies the interactions between real macroeconomics and financial variables. There is an emerging literature aims to investigate how can we reduce the impacts from the financial crisis by considering both macroeconomics and finance conditions together. For example, decision-makers should consider the financial market conditions first before policies are made. Meanwhile, the forecasting of short term financial variables' returns should take long term macroeconomic conditions into consideration. This has motivated us to explore further in the relationship between the macroeconomic factors and financial market conditions. In the first chapter, we examine the short-run and long-run dynamics of the correlation between exchange rate and commodity returns, and assess the extent to which the long-run correlation is determined by economic fundamentals. Our empirical analysis is based on the dynamic conditional correlation model with mixed data sampling (DCC-MIDAS) of Colacito, Engle and Ghysels (2011). This model provides a framework that captures the high-frequency relation between exchange rate and commodity returns as well as the low-frequency relation of volatility and correlation to economic fundamentals. Using both economic and statistical criteria, we find that the DCC-MIDAS\ model augmented with economic fundamentals performs better than competing models in sample and out of sample. In the second chapter, we investigate the direction of Granger causality between business and financial cycles. Our analysis is based on a vector autoregression model applied on mixed frequency data. This allows us to condition on data from higher frequency variables (such as monthly industrial production) and lower frequency variables (such as quarterly aggregate credit) in a way that avoids the effects on data aggregation. Our empirical investigation focuses on five industrialized countries: USA, Canada, UK, Germany and Japan. Firstly, we examine whether the monthly industrial production index causes quarterly aggregate credit or vice versa. Then, we determine the timing of when causality is statistically significant. We find that there is strong bidirectional causality between business and financial cycles. The timing of causality varies across countries, but for all countries, bidirectional causality is significant during the financial crisis. The third and final chapter, which is an extension of the second chapter, investigates the role of the US as a global leader. Specifically, by paring US with other country (i.e, Canada, UK, Germany and Japan), we examine whether the US industrial production or credit causes the industrial production or credit of the other countries. In addition, we investigate whether causality is affected by the nominal interest rate. Our main finding is that the US business cycle strongly causes the business cycles of Canada, the UK and Germany. Finally, there is strong evidence that causality tends to be significant when the US interest rate is higher.




Understanding Interdependence


Book Description

Surveying the current state of knowledge on the international monetary system, this volume contains essays on the behaviour of exchange rates, current account adjustment, international debt, European monetary union, capital mobility, the reform of former planned economies, and more.