Essays on money and inflation /
This dissertation consists of three essays on open economy macroeconomics. Chapter II compares the "robustness'' of fixed versus flexible exchange rate systems in the presence of sticky prices. Robustness is defined as the ability of an exchange rate regime to overcome unjustified cri...
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| Format: | Thesis Book |
| Language: | English |
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[Place of publication not identified] :
[publisher not identified] ;
1999.
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| Online Access: | http://proxy.library.tamu.edu/login?url=http://proquest.umi.com/pqdweb?did=733509521&sid=1&Fmt=2&clientId=2945&RQT=309&VName=PQD |
| Summary: | This dissertation consists of three essays on open economy macroeconomics. Chapter II compares the "robustness'' of fixed versus flexible exchange rate systems in the presence of sticky prices. Robustness is defined as the ability of an exchange rate regime to overcome unjustified crises (i.e., crises prompted by expectations not justified by initial fundamentals). Nominal rigidity in the nontraded (home) goods sector implies that the nontraded goods prices may start changing in anticipation of events that are yet to happen. Via this channel confidence crises can affect the financial position of the government under different exchange rate regimes, thereby threatening the sustainability of the ongoing disputation program. It is found that the monetary rule is robust but the exchange rate rule is not. Chapter III studies the effects of different specifications of real balances in a two sector economy where money generates utility. It shows that not only the choice of the deflator, but also the structure of the utility function could vitally affect the transition dynamics. As an illustration, it demonstrates that a rise in government spending on nontraded goods can give conflicting results. The ''stylized'' result of temporary trade deficit is possible, so is a temporary trade surplus, or surprisingly, an unchanged trade balance. Chapter IV examines the possibility and implication of holding money in excess of the cash-in-advance requirement. This chapter is motivated by the fact that if money is not return-dominated, it could be used, at least temporarily, as a store of value. The case of an anticipated fall in real income is analyzed as an example of how excess liquidity could be held during the transition to a new steady state. However, if the cash-in-advance constraint is imposed as a strict equality, consumers will be forced to take on a different path of consumption than if an inequality is allowed. Welfare consequences of different adjustment paths are also discussed. |
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| Item Description: | Vita. "Major Subject: Economics". |
| Physical Description: | ix, 82 leaves : illustrations ; 28 cm. Issued also on microfiche from University Microfilm Inc. |
| Bibliography: | Includes bibliographical references (leaves 70-73). |