International Economics II: International Monetary Theory and Open-Economy Macroeconomics

ISBN-13: 9783540586876 / Angielski / Miękka / 1995 / 560 str.

Giancarlo Gandolfo

Opis

Besides traditional topics of international monetary theory and open-economy macroeconomics, this textbook also contains further concepts like the theory of monetary integration and the European monetary union, foreign exchange crises and the Tobin tax, theory of games and international policy coordination.
The book has a unique "two-tier" structure, the text speaks directly to the undergraduate, the appendices are addressed to the graduate student and the researcher. The book can also be used as a reference book. The ample and balanced treatment of the various approaches and the clarity of exposition ensure that the reader gains a thorough grasp of theories, facts and policies.

Spis treści

10 The foreign exchange market.- 10.1 Introduction.- 10.2 The spot exchange market.- 10.3 The forward exchange market and swap transactions.- 10.3.1 Introduction.- 10.3.2 Various covering alternatives; forward premium and discount.- 10.3.3 Covered interest arbitrage.- 10.3.4 Swap transactions.- 10.4 The transactors in the foreign exchange market.- 10.4.1 A digression on speculation.- 10.4.2 Other transactors.- 10.5 The various exchange-rate regimes.- 10.5.1 The two extremes.- 10.5.2 The Bretton Woods system.- 10.5.3 Other limited-flexibility systems.- 10.5.4 The current nonsystem.- 10.6 Euro-dollars and Xeno-currencies: an introduction.- 10.7 International interest-rate parity conditions, and the foreign exchange market.- 10.7.1 Covered interest parity (CIP).- 10.7.2 Uncovered interest parity (UIP).- 10.7.3 Uncovered interest parity with risk premium.- 10.7.4 Real interest parity.- 10.7.5 Efficiency of the foreign exchange market.- 10.7.6 Perfect capital mobility, perfect asset substitutability, and interest parity conditions.- A.10.1 N-point arbitrage.- A.10.2 On the measure of the approximation error of the interest differential.- A.10.3 Marginal conditions and portfolio selection theory in speculative equilibrium.- A.10.3.1 Proof of the marginal conditions.- A.10.3.2 Marginal conditions and portfolio selection theory.- A.10.4 Expectations, interest, parity and market efficiency.- A.10.4.1 Rational expectations and market efficiency.- A.10.4.2 The Peso problem.- A.10.4.3 The Siegel paradox.- References.- 11 Balance of payments and national accounts.- 11.1 Balance-of-payments accounting and presentation.- 11.1.1 Introduction.- 11.1.2 Accounting principles.- 11.1.3 Standard components.- 11.1.3.I Current account.- 11.1.3.II Capital account.- 11.2 The meaning of “surplus”, “deficit”, and “equilibrium” in the balance of payments.- 11.3 The balance of payments and national accounts.- 11.4 The international adjustment process and open-economy macroeconomics: an overview.- A.11.1 The presentation of the US balance of payments.- A.11.2 Illegal transactions in the balance of payments.- References.- 12 The role of the exchange rate in the adjustment process in a partial equilibrium framework.- 12.1 Introduction.- 12.2 Critical elasticities and the so-called Marshall-Lerner condition.- 12.2.1 The balance of payments in domestic currency.- 12.2.2 The balance of payments in foreign currency.- 12.2.3 Partial vs total elasticities.- 12.2.4 A note on terminology.- 12.3 The equilibrium exchange rate; multiple equilibria and stability.- 12.3.1 Derivation of the demand and supply schedules; stability.- 12.3.2 Multiple equilibria.- 12.3.3 Monetary authorities’ intervention to peg the exchange rate.- 12.4 Interrelations between the spot and forward exchange rate.- 12.4.1 The various excess demand schedules.- 12.4.2 Forward market equilibrium and the spot rate.- 12.4.3 The monetary authorities’ intervention.- A.12.1 The critical elasticities condition.- A. 12.1.1 The simple case.- A.12.1.2 The general case.- A.12.1.3 Effects on the terms of trade.- A. 12.2 The stability of the foreign exchange market.- A. 12.3 A framework for the simultaneous determination of the spot and forward exchange rate.- References.- 13 The role of income changes in the adjustment process.- 13.1 Introduction.- 13.2 The multiplier without foreign repercussions and the balance of payments.- 13.2.1 The basic model.- 13.2.2 Balance-of-payments adjustment in the case of an exogenous increase in exports.- 13.2.3 Balance-of-payments adjustment in the case of an exogenous increase in imports.- 13.3 Foreign repercussions.- 13.3.1 A simplified two-country model.- 13.3.2 An alternative graphic representation and stability analysis.- 13.3.3 Multipliers and balance-of-payments adjustment.- 13.4 Intermediate goods and the multiplier.- 13.4.1 Introductory remarks.- 13.4.2 Different requirements of intermediate goods.- 13.4.3 Identical requirements of intermediate goods.- 13.4.4 Some empirical results.- A.13.1 The multiplier without foreign repercussions.- A.13.1.1 Basic results.- A.13.1.2 The balance of payments.- A.13.2 The multiplier with foreign repercussions.- A.13.2.1 The basic model.- A.13.2.2 Stability analysis.- A.13.2.3 The various multipliers: a comparison.- A.13.2.4 The balance of payments.- A.13.3 Foreign repercussions in a n-country model.- A.13.3.1 The general model.- A.13.3.2 Stability analysis.- A.13.3.3 Comparative statics. A comparison between the various multipliers.- A.13.3.4 The balance of payments.- A. 13.4 Concluding remarks. The empirical relevance of the foreign multiplier.- References.- 14 The absorption approach and interactions between exchange rate and income in the adjustment process.- 14.1 The absorption approach.- 14.2 Elasticities versus absorption: controversy and synthesis.- 14.3 A dynamic model of interaction between exchange rate and income in the adjustment process.- 14.3.1 The basic model.- 14.3.2 A graphic representation.- 14.3.3 Stability and comparative statics.- 14.3.4 The J-curve.- A.14.1 Alexander’s synthesis.- A.14.2 A simplified version of the Laursen and Metzler model.- A.14.2.1 The RR and BB schedules.- A.14.2.2 The dynamics of the system.- A.14.2.3 Comparative statics.- A.14.3 The J-curve.- A.14.4 The original two-country version of the Laursen and Metzler model.- A.14.4.1 The basic model.- A.14.4.2 Stability.- A.14.4.3 Comparative statics.- References.- 15 Money and other assets in the adjustment process under fixed exchange rates.- 15.1 Introduction.- 15.2 The classical (Humean) price-specie-flow mechanism.- 15.2.1 Introductory remarks.- 15.2.2 A simple model of the classical theory.- 15.2.3 Concluding remarks.- 15.3 The monetary approach to the balance of payments.- 15.3.1 The basic propositions and implications.- 15.3.2 A simple model.- 15.3.3 Concluding remarks.- 15.4 Macroeconomic equilibrium in a standard Keynesian-type open model.- 15.4.1 Introductory remarks: The Mundell-Fleming model.- 15.4.2 Graphic representation of the equilibrium conditions.- 15.4.3 Simultaneous real, monetary and external equilibrium; stability.- 15.4.3.1 Observations and qualifications.- 15.4.4 Comparative statics.- 15.5 Monetary and fiscal policy for external and internal balance. The assignment problem. The coordination problem.- 15.5.1 Introductory remarks.- 15.5.2 Internal and external balance and the assignment problem.- 15.5.2.1 Observations and qualifications.- 15.5.3 The policy coordination problem across countries.- 15.6 Portfolio equilibrium in an open economy.- 15.6.1 Introduction.- 15.6.2 Asset stock adjustment in a partial equilibrium framework.- 15.6.3 Portfolio equilibrium and macroeconomic equilibrium.- 15.6.3.1 Introductory remarks.- 15.6.3.2 A simple model.- 15.6.3.3 Momentary and long-run equilibrium.- A.15.1 A formal interpretation of the classical theory.- A.15.2 The monetary approach to the balance of payments.- A.15.2.1 A simple model.- A.15.2.2 A two-country model.- A.15.2.3 The effects of a devaluation.- A.15.3 Macroeconomic equilibrium in a standard Keynesian-type open model.- A.15.3.1 The slopes of the various schedules.- A.15.3.2 The study of dynamic stability.- A.15.3.3 Comparative statics.- A.15.4 Monetary and fiscal policy and internal and external balance.- A.15.4.1 The static model.- A.15.4.2 The assignment problem.- A.15.5 The problem of coordination.- A.15.5.1 The basic model.- A.15.5.2 International coordination compared to simple pairing.- A.15.5.3 International coordination compared to internal coordination.- A.15.6 Portfolio equilibrium in an open economy.- A.15.6.1 The case of partial equilibrium.- A.15.6.2 Portfolio and macroeconomic equilibrium.- A.15.6.2.1 The dynamics of the long-run equilibrium.- A.15.6.2.2 The stability conditions.- References.- 16 Money and other assets in the adjustment process under flexible exchange rates.- 16.1 Introduction.- 16.2 The critical elasticities condition is neither necessary nor sufficient.- 16.2.1 The basic model.- 16.2.2 Non-necessity and non-sufficiency of the critical elasticities condition.- 16.3 Monetary and fiscal policy for internal and external balance in the standard Keynesian macroeconomic model, and the choice of instruments.- 16.3.1 Perfect capital mobility.- 16.3.2 The normal case.- 16.4 The alleged insulating power of flexible exchange rates and the international propagation of disturbances.- 16.4.1 The alleged insulating power.- 16.4.2 The propagation of disturbances in a simple model.- 16.4.3 The propagation of disturbances in a two-country model.- 16.5 The new Cambridge school of economic policy.- 16.5.1 Introductory remarks.- 16.5.2 The basic model.- 16.5.3 Observations and qualifications; other versions.- 16.6 Portfolio and macroeconomic equilibrium in an open economy.- 16.6.1 Introductory remarks.- 16.6.2 The basic model.- 16.6.3 Static expectations.- 16.6.4 Rational expectations and overshooting.- A.16.1 The critical elasticities condition is neither necessary nor sufficient.- A.16.2 On the choice of policy instruments.- A.16.2.1 Fiscal policy.- A.16.2.2 Monetary policy.- A.16.3 On the alleged insulating power of flexible exchange rates and the propagation of disturbances.- A.16.3.1 The one-country model.- A.16.3.2 The two-country model.- A.16.4 The new Cambridge school.- A.16.4.1 The basic model.- A.16.4.2 An extension.- A.16.5 Portfolio and macroeconomic equilibrium.- A.16.5.1 The basic model.- A.16.5.2 Static expectations.- A.16.5.2.1 Short-run equilibrium.- A.16.5.2.2 Long-run equilibrium.- A.16.5.3 Rational expectations.- A.16.6 Forward market intervention.- References.- 17 International capital movements and other problems.- 17.1 Introduction.- 17.2 Short-term capital movements and foreign-exchange speculation.- 17.2.1 The main types of short-term capital movements.- 17.2.2 Flexible exchange rates and speculation.- 17.3 Long-term capital movements.- 17.4 The transfer problem.- 17.4.1 Introductory remarks.- 17.4.2 The traditional setting.- 17.4.3 Observations and qualifications.- 17.5 Exports, growth, and the balance of payments.- 17.5.1 Export-led growth.- 17.5.2 Growth and the balance of payments.- A.17.1 Speculation.- A.17.2 The transfer problem.- A.17.3 Exports, growth, and the balance of payments.- References.- 18 The exchange rate.- 18.1 Introduction.- 18.2 The traditional arguments.- 18.3 The experience of the managed float.- 18.3.1 Introduction.- 18.3.2 New light on an old debate?.- 18.4 The vicious circle of depreciation-inflation.- 18.4.1 Introductory remarks.- 18.4.2 The depreciation-inflation circle.- 18.4.3 Is the circle really vicious?.- 18.5 Exchange-rate determination: theory.- 18.5.1 The purchasing-power-parity theory.- 18.5.2 The traditional flow approach.- 18.5.3 The modern approach: money and assets in the determination of the exchange rate.- 18.5.3.1 Introductory remarks.- 18.5.3.2 The monetary approach.- 18.5.3.3 The portfolio approach.- 18.5.3.4 Interaction between current and capital accounts.- 18.5.4 The exchange rate in macroeconometric models.- 18.6 Exchange-rate determination: empirical studies.- 18.6.1 Introduction.- 18.6.2 The reactions to Meese and Rogoff, and the way out.- 18.6.3 An economy-wide model beats the random walk.- A.18.1 A disequilibrium model of real and financial accumulation in an open economy.- A.18.2 The modern approach to exchange-rate determination.- A.18.2.1 The monetary approach.- A.18.2.2 The portfolio approach.- A.18.2.3 Empirical studies.- A.18.2.4 Currency substitution.- References.- 19 The theory of monetary integration and the European Monetary System.- 19.1 Introduction.- 19.2 The theory of optimum currency areas.- 19.2.1 The traditional approach.- 19.2.2 The cost-benefit approach.- 19.2.3 The common monetary unit and the basket-currency.- 19.3 The common monetary policy prerequisite.- 19.4 The single-currency problem.- 19.5 The European Monetary System.- 19.5.1 Introduction.- 19.5.2 The ECU.- 19.5.3 The indicator of divergence.- 19.5.4 Monetary cooperation within the EMS.- 19.5.5 The EMS and the theory of optimum currency areas.- 19.6 Towards the European Monetary Union?.- 19.6.1 The Maastricht treaty and the gradual approach to monetary union.- 19.6.2 The institutional aspects.- 19.6.3 Conclusion.- A.19.1 Fiscal policy in a monetary union.- A.19.2 Some properties of basket-currencies in general and of the indicator of divergence in particular.- A.19.2.1 The basket-currency.- A.19.2.1.1 The sum of the weights.- A.19.2.1.2 Solution for the quantities.- A.19.2.1.3 Other properties.- A.19.2.2 The indicator of divergence.- A.19.2.3 The asymmetry in the bilateral margins.- References.- 20 Problems of the international monetary system.- 20.1 Key events in the postwar international monetary system.- 20.1.1 Introductory remarks.- 20.1.2 Convertibility.- 20.1.3 Euro-dollars.- 20.1.4 Special Drawing Rights.- 20.1.5 Collapse of Bretton Woods.- 20.1.6 Petrodollars.- 20.1.7 Demonetization of gold.- 20.1.8 The EMS.- 20.1.9 The international debt crisis.- 20.2 International liquidity and the demand for international reserves.- 20.2.1 Introductory remarks.- 20.2.2 The descriptive approach.- 20.2.3 The optimizing approach.- 20.2.4 The problem of the composition of international reserves.- 20.3 The traditional analysis of Euro-markets.- 20.3.1 General remarks and the simple multipliers.- 20.3.2 More sophisticated multipliers.- 20.4 The portfolio approach to Euro-markets.- 20.5 An evaluation of the costs and benefits of Xeno-markets.- 20.6 International capital flows and foreign exchange crises.- 20.6.1 Introduction.- 20.6.2 The basic case.- 20.6.3 Exchange rate expectations and the credibility problem.- 20.6.4 TheTobin tax.- 20.7 International policy coordination.- 20.7.1 Policy optimization, game theory, and international coordination.- 20.7.2 The problem of the reference model and the obstacles to coordination.- 20.8 Proposals for the international management of exchange rates.- 20.8.1 Introduction.- 20.8.2 McKinnon’s global monetary objective.- 20.8.3 John Williamson’s target zones.- A.20.1 The optimum level of international reserves and the theory of economic policy.- A.20.1.1 The cost-benefit approach.- A.20.1.2 The maximization of a welfare function.- A.20.1.3 Intertemporal maximization and the normative theory of economic policy.- A.20.2 The composition of international reserves.- A.20.3 A portfolio model of the euro-market.- A.20.4 Capital liberalization and foreign exchange crises.- A.20.4.1 Introduction.- A.20.4.2 The actual specification.- A.20.4.3 The method of analysis.- A.20.5 The policy coordination problem.- A.20.6 Target zones.- References.- 21 The problem of integration between the pure theory of international trade and international monetary economics.- 21.1 Introduction.- 21.2 An epistemological problem.- References.- Name Index.