|Series||Discussion paper in economics / Birkbeck College -- 1/90|
Emanuela Cardia The dynamics of a small open economy in response to monetary, APOSTOLIS PHILIPPOPOULOS MACROECONOMIC DYNAMICS AND OPTIMAL EXTERNAL BORROWING IN AN IMPERFECT WORLD CAPITAL MARKET, Douglas D. Purvis Chapter 16 The specification and influence of goods and factor markets in open-economy macroeconomic models, Cited by: Increased government borrowing can affect the interest rate. monetary policy –central bank changes money supply and this affects interest rates which in turn affect investment and consumption spending In an open economy, the interest rate changes will affect the demand for currency. The New Open Economy Macroeconomics refers to a vast body of literature embracing a new theoretical framework for policy analysis in open economy, with the goal of overcoming the limitations of the Mundell-Fleming model, while preserving the empirical wisdom and policy friendliness of Cited by: This extension has been justified in the sense of optimal monetary policy for a small open economy in which the home bias exists as noted by Faia and Monacelli (). And the fiscal rule has an.
In this paper, we compare the empirical properties of closed- and open-economy DSGE models estimated on Euro area data. The comparison is made along several dimensions; we examine the models in terms of their marginal likelihoods, forecasting performance, variance decompositions, and their transmission mechanisms of monetary policy. Macroeconomic Dynamics publishes theoretical, empirical or quantitative research of the highest standard. Papers are welcomed from all areas of macroeconomics and from all parts of the world. Major advances in macroeconomics without immediate policy applications will also be accepted, if they show potential for application in the future. Chin, Chi-Ting, Guo, Jang-Ting, and Lai, Ching-Chong () A note on indeterminacy and investment adjustment costs in an endogenously growing small open economy. Macroeconomic Dynamics . Proof outline. (1) Find a K⁄ candidate; show it is unique. (2) If K0 > K⁄, show that K⁄ Kt+1 > Kt 8t > 0. (3) We have concluded that Kt is a monotonic sequence, and that it is also bounded. Now use a math theorem: a monotone bounded sequence has a limit. The proof of this theorem establishes not.
The economy faces an external borrowing constraint. The adjustment of the short- and long-term rates as well as the discount bond yield curve is distinguished, with the long rate and the yield. Although monetary policy has no long-run growth effect, increasing the nominal interest rate permanently reduces the levels of output, consumption, and employment. Taking transition dynamics into account, we find that welfare is decreasing in the nominal interest rate and the Friedman rule is optimal in this economy. Transitional Dynamics The Dynamics of Policy Shocks Short-Run Effects of Increases in Tax Rates Tax Incidence Optimal Taxation ' Time Inconsistency Notes 12 The Representative Agent Model in the International Economy Introduction and Overview Basic Monetary Model A monetary policy that lowers interest rates and stimulates borrowing is an expansionary monetary policy or loose monetary policy. Conversely, a monetary policy that raises interest rates and reduces borrowing in the economy is a contractionary monetary policy or tight monetary module will discuss how expansionary and contractionary monetary policies affect interest rates and.