The Independent Monetary Policy under the Fixed Exchange Regime

Using a macro-econometric model that is specified for the current Chinese economy, we investigate the performance of monetary policy in China with the assumption (which anyway will occur in the near future) that capital market was opened. Our purpose is to find how the monetary authority should response to a variety of external shocks by applying different policy tools (including required reserve ratio, buying and selling foreign exchange, the open market operation, the discount rate among others) while keeping the exchange rate within a designed regime. The Monte Carlo simulation will be used to evaluate the effectiveness of such policy reactions.

Deflationary Expansion : an Overshooting Perspective to the Recent Business Cycle in China

Deflationary expansion has puzzled economists both in and outside China. We study this business cycles phenomenon within a model of discrete time dynamics. We find that deflationary expansion could be possible if driven by an overshooting in investing and if the state of the economy maintains high rate of growth. This expression is consistent with the recent variables. The high steady state of growth could be explained by the current institutional environment of China.Deflationary Expansion, China, Existence and Stability Conditions of Equilibrium, Business Fluctuations, monetary policy, Central Banking, Supply of Money and Credit

Monetary Policy and Exchange Rate Regime: Proposal for a Small and Less Developed Economy

We investigate monetary policy under the assumption that a country’s capital market is “open” under the WTO framework while the exchange rate is fixed. Our purpose is to determine if it is possible in this case for the economy to maintain an effective monetary policy for stabilizing the domestic economy. For this, we suggest two institutional restrictions. Given the restrictions, we demonstrate within a macro-dynamic model that monetary policy can still be effective. The implication of such an institutional design for an exchange rate regime is also discussed with special reference to small and less development economies.open economy trilemma; macroeconomic stability; exchange rate regime

Quantifying the impact of structural reforms

We estimate a dynamic, intertemporal optimisation model that mimics features of European labour markets, such as sticky nominal wages and sluggish adjustment of employment to shocks for 15 OECD countries. The estimates include a measure for the degree of labour market sluggishness that compares well with standard indicators of product and labour market regulation. Calibration of the model on a selected country sample confirms its explanatory power in comparison with the standard competitive markets model. In a second step, the measure for labour market sluggishness is used as a policy variable and model variants are simulated in order to assess the extent to which the countries would have performed better with more flexible labour markets. These policy experiments show that an increase in labour market flexibility reduces the volatility of consumption relative to production, improves intertemporal efficiency but entails higher employment risk. JEL Classification: E32, C61business cycles, labour market reforms in OECD countries, nominal and real rigidities, non-clearing labour markets

July 1, 1835: What did the Caddo Believe they were Selling, and was the Price Paid Fair?

Most Caddo scholars interested in the tribe’s last years in Louisiana would probably agree that the above questions are largely settled business. The authors, both geographers, would tend to concur that a consensus has probably been reached on these questions; however, those with a desire to get at the truth of the matter might want to at least consider the array of archival documentation that paints a somewhat different picture of this aspect of the land cession. In the pages that follow, a case will be presented that, from the Caddo perspective of the mid-1830s, the tribe knew exactly what they intended to sell the United States, and that ultimately the per-acre price paid to them was greater than they proposed to the treaty negotiator. Certainly in hindsight the Caddo got the short end of the stick, but in terms of conditions on the ground at the time, period materials suggest that the deal made was fair, reasonable and clearly desired by both sides