Studies on macroeconomic adjustment in open-economies
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Abstract
This thesis attempts to focus on several 'unresolved' issues that exist
in the field of open-economy macroeconomics. 41
Chapter 2 examines the implications of1currency substitution, (CS) for
the behaviour of a small open economy, subsequent to an unanticipated
contraction in the domestic money supply. Chapter 3 concentrates on the
role of CS, capital mobility and price stickiness in the international
transmission of disturbances. Chapter 4 explores how the degree of
openness of national economies might influence the relationships among
exchange rates, price levels, interest rates and international balances of
payment. Chapter 5 examines the relative effectiveness of various simple
policy rules for economic stabilization, under alternative assumptions
about the degree of openness of individual economies. In Chapter 6 we
study the behaviour of a semi-small open economy subsequent to
(unanticipated) increases in foreign interest rates, using a model in which
some of the key characteristics of the major debtor countries are
incorporated. In Chapter 7 we analyse the effects of exogenous financial
disturbances on the economy of a debtor country, under alternative
assumptions about the nature of its external debt.
Chapter 1 attempts to provide a "background' for the analysis in the
remainder of the thesis, by discussing some of the developments in the
theoretical literature and in the world economy that have motivated our
study