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|Title:||Three Studies in International Macroeconomics|
|Doctoral Committee Chair(s):||Turnovsky, Stephen J.|
|Department / Program:||Economics|
|Degree Granting Institution:||University of Illinois at Urbana-Champaign|
Political Science, Public Administration
|Abstract:||The first study examines a continuous time deterministic model of a small open economy with flexible exchange rates, perfectly integrated bonds market, and perfect foresight. The price of domestic goods is assumed sluggish relative to the exchange rate which adjusts instantaneously. We introduce a markup pricing rule and examine anticipated and unanticipated changes in the exogenously given markup rate as well as in the rate of monetary growth. Next, we simulate a differential game between the government and the private sector.
The second study deals with a discrete time, stochastic model of the economy with perfectly integrated good and bonds market, wage indexation, and rational expectations. Goods prices are assumed perfectly flexible and output responds to unexpected price changes. First, we examine a small open economy and show that, under flexible exchange rates, the optimal degree of wage indexation chosen domestically depends on the degree of wage indexation in the rest of the world. Following that, we consider a two country model where the optimal choice of the degree of wage indexation domestically and abroad is simultaneously determined and involves strategic behavior.
The third study considers a continuous time deterministic monetary model of a small open economy, with perfect foresight, founded on microeconomic optimization principles of decentralized consumers and firms. We define preferences, technology, and endowments and derive a perfect foresight equilibrium for the economy subject to appropriate budget constraints. Then, we perform temporary monetary and fiscal policy experiments focusing on the inter coordination between both, as well as on intra coordination within the fiscal authority. We also examine the monetary Laffer curves that derive from the monetary experiment.
Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1988.
|Date Available in IDEALS:||2014-12-16|