Optimal Monetary Policy Rules in A Simple Stochastic Macro Model: China's Evidence

In this paper we apply a simple macro model to explore and evaluate certain optimal monetary policy rules for China's economy. To be more consistent with the central bank (the People's Bank of China)'s behaviour, we use money supply as a monetary policy instrument rather than the commonly used interest rate. Policy rules are optimal in terms of minimizing the predetermined loss functions, and the parameters of these rules are determined by stochastic simulation. Different forms of policy rule and loss function are considered, especially for exchange rate volatility and money supply volatility. The optimality of monetary policy rules is evaluated by comparing the shifts of policy frontiers.Monetary Policy Rule, Loss Function, Stochastic Simulation, Policy Frontier, China

RESOURCE-GRABBING BY STATUS-CONSCIOUS AGENTS

We introduce a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within their reference group. We explore the effect of the concern for relative consumption on the growth rate and the welfare of an economy where agents appropriate from a common property resource. Our model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, the social welfare is lower because the growth rate of the public asset is reduced doe to higher extraction rate. We also consider the effect of increased heterogeneity, and show that social welfare decreases as the distribution of status-consciousness among agents widens.

Economic policies in developing and emerging market economies : three essays in international and development economics

This thesis consists of three essays, which focus on different aspects of economic policy issues faced by developing and emerging market economies. The first essay explores the effect of monetary policy credibility on exchange rate volatility in a small open economy, even if the exchange rate is not an explicit target set by the monetary authority. Using an open economy framework modified from Gall and Monacelli (2005) and Walsh (2006), it shows that monetary policy credibility helps to stabilize the exchange rate as supply and demand side shocks hit the domestic economy. The monetary policy credibility can be achieved by the monetary authority's commitment to certain rules aiming for output/price smoothing. In the empirical analysis inflation targeting is used as a proxy variable for monetary credibility. The GARCH model of selected South-East Asian countries indicates that countries with inflation targeting policies have exhibited reduced exchange rate volatility when other factors are controlled.The second essay looks at FDI inflows into developing economies. Two distinctive differences of FDI inflows between developed and developing economies are entry modes and evidence of government regulations. This essay investigates the incentives of FDI flows in terms of cost-saving merger, fixed cost of entry and the role of government policies. In particular it shows that, if the cost-saving effect is large and the government intervenes, the foreign firm will consider the FDI through either Greenfield or Brownfield, which corresponds to the situation for FDI flows into developing economies. Otherwise, the foreign firm will only consider Brownfield or staying outside, which stands for the developed economy case. Since one remarkable feature of the FDI flows into developing countries is the benefit of cost-saving from low labour costs, this essay takes this effect into account and provides insights for economic "outsourcing". The multi-stage sequential game model presented in this chapter provides comparable results for the pattern of the FDI flows affected by regulation and institutional factors, which are not addressed by existing literature. Finally, it reveals some intuition and feature of a developing economy where the government regulations on FDI flows are more often observed.The third essay deals with the resource/revenue reallocation within powerful groups in the economy and the impact of the rent-seeking behavior of these groups on the economic growth and the social welfare. In particular, it introduces a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within his/her reference group. The purpose of this paper is to explore the effect of the "positional externalities" on the urge to seek rent and to connect the "tragedy of the commons" problem with relative consumption. The model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, the social welfare is lower because the growth rate of the public asset is reduced due to higher extraction rate. After introducing heterogeneity, it shows that the social welfare decreases as the distribution of status-consciousness among agents widens. Finally, it provides some policy suggestions that the government might consider to achieve a second best social outcome

What Drives House Prices in Australia? A+L4584 Cross-Country Approach

This paper analyzes the factors driving house prices in Australia from a cross-country perspective using several approaches. It uses a cointegration technique to estimate the long-run equilibrium house prices in Australia, New Zealand, and Canada and assesses the extent of a possible disequilibrium. It also presents an event analysis to shed some light on the link between house prices, capital inflows and the terms of trade. The econometric analysis suggests an overvaluation of 5-10 percent depending on the model specification. Event analysis indicates that terms of trade shocks were associated with larger increases in house prices in Australia, than in the case of strong capital inflow episodes.Capital inflows;Terms of trade;Economic models;Housing prices;capital inflow, trade shocks, terms of trade shocks, commodity prices, current account deficit, trade shock, capital flows, private capital inflows, commodity exporters, domestic demand, capital inflow episodes, nominal interest rates, prudential regulation, private capital, per capita income, current account balance, net capital, aggregate demand, capital inflow episode, open economy, capital income, world economy, real effective exchange rate, capital flow, stock market

Monetary policy rules under a fixed exchange rate regime: empirical evidence from China

This article uses an open economy model to estimate, using cointegration and error-correction analysis, China's monetary policy reaction function for the period 1993 to 2003. Alternative inflation-forecast-based (IFB) policy Taylor-type rules for the interest rate are examined and their parameters are estimated. The empirical results support the hypothesis that the central bank of China follows a Taylor-type rule for the interest rate, with the aim of inflation targeting and output smoothing.

Resource-grabbing by status-conscious agents

We introduce a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within their reference group. We explore the effect of the concern for relative consumption on the growth rate and the welfare of an economy where agents appropriate from a common property resource. Our model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, social welfare is lower because the growth rate of the public asset is reduced due to higher extraction rate. We also consider the effect of increased heterogeneity, and show that social welfare decreases as the distribution of status-consciousness among agents widens.Rent-seeking Status Relative consumption Welfare Heterogeneity

Circ_0003340 regulates the expression of ENAH to affect the development of esophageal cancer through miR‐874‐3p

Abstract Background Esophageal cancer is a malignant tumor with a poor prognosis and high incidence. Circular RNAs (circRNAs) have been shown to be involved in the pathogenesis of cancers, including esophageal cancer. Here, we explored the precise role of circ_0003340 in esophageal cancer development. Methods The expression levels of circ_0003340, miR‐874‐3p and enabled homolog (ENAH) were detected by quantitative real‐time polymerase chain reaction and western blot. Subcellular localization and RNase R assays were used to characterize circ_0003340. Cell Counting Kit 8, flow cytometry, transwell assays were used to analyze cell proliferation, apoptosis, migration and invasion. The effect of circ_0003340 on tumor growth was assessed by tumor experiments in vivo. Dual‐luciferase reporter assay was used to analyze the relationship between miR‐874‐3p and circ_0003340 or ENAH. Results Circ_0003340 was mainly located in the cytoplasm and was upregulated in esophageal cancer tissues and cells. Circ_0003340 knockdown inhibited cell proliferation, migration, invasion, glucose consumption, and lactate production and induced cell apoptosis in esophageal cancer cells. Moreover, circ_0003340 knockdown suppressed tumor growth in vivo. MiR‐874‐3p was reduced in esophageal cancer tissues and cells, and it was a molecular mediator of circ_0003340 function in esophageal cancer cells. ENAH was identified as a direct and functional target of miR‐874‐3p in esophageal cancer cells. The promotion effect of circ_0003340 on ENAH was ameliorated by miR‐874‐3p. Conclusion The data demonstrated that circ_0003340 promoted the progression of esophageal cancer through miR‐874‐3p/ENAH axis, which might provide novel therapeutic targets for esophageal cancer intervention