Taxation,inflation, and the terms of trade

The interaction between changes in the rate of inflation and tax systems can have potential terms of trade effects. An open-economy macroeconomic model is presented in which such effects are analyzed. The asset menu consists of money, corporate capital whose nominal income is subject to taxation, and consumer durables whose return is tax exempt. This may be contrasted with the conventional menu of money and capital and/or bonds. Durables are imported. An increase in the rate of inflation then implies that the terms of trade of the country in question deteriorates in the long run.     

Economic Uncertainty,Monetary Uncertainty,and the Demand for Money: Evidence From Asian Countries

In 1984 Nobel Lauriat Milton Friedman claimed that the decline in velocity of money or an increase in the demand for money was due to volatility of money supply. Another study argued that if monetary volatility could impact the demand for money, so can output volatility (as a measure of economic uncertainty). Both measures of uncertainty can cause people to reallocate their assets between cash and real assets that are less risky. If public become more cautious about the future, they will hold more cash today. However, if they chose to hedge against uncertain prices, they may hold more real assets and less cash. These two hypotheses are tested for Asian countries using bounds testing approach. While both measures are found to have short‐run significant effects on the demand for money in almost all countries, the short‐run effects last into the long run in half of the countries. Furthermore, we find positive and negative effects of both measures which are in line with previous research related to a few developed countries.     

财政政策、货币政策与国外经济援助

本文通过把国外经济援助分成直接对私人的经济援助和直接对政府的经济援助来讨论这两类经济援助对政府财政政策和货币政策的影响。我们发现对私人的经济援助的增加可以使得私人消费水平和政府公共消费水平增加 ,但是它也导致政府收入税税率和通货膨胀率的提高 ;另一方面 ,对政府的经济援助增加可以使得均衡时的私人资本存量、私人消费水平和政府公共消费水平增加 ,同时可以使得均衡时的收入税税率和通货膨胀率下降。     

货币供给、通货膨胀、经济增长之间关系的实证研究——基于2006～2010年数据的分析

利用我国2006年12月～2010年12的月度数据,在VAR模型的基础上,对我国货币供应、通货膨胀、经济增长之间的关系进行实证分析。研究发现,短期内通货膨胀和经济增长对货币供应量的效应相反;货币供应并不影响通货膨胀和经济增长;经济增长与通货膨胀无关,通货膨胀对经济增长具有正面效应。长期来看,通货膨胀和货币供应量之间正相关;经济增长对货币供应具有负效应,货币供给量的增加促进经济增长,证实我国存在托宾效应;经济增长和通货膨胀之间作用相反,通货膨胀损害经济增长的弗里德曼假说在我国适用。同时得出我国货币供给具有非中性和内生性特点的结论。     

Money, capital, and real liquidity effects with habit formation

Abstract.  The money in utility model is reconsidered in the presence of endogenous labour and habits. With standard assumptions about preferences and a policy rule that sets the nominal interest rate by adjusting the growth rate of money, the model exhibits superneutrality in the steady state. Nevertheless, habits give rise to real liquidity effects in the short run. After an increase in the nominal interest rate, employment falls, resulting in a fall in capital accumulation and in the short‐ and long‐term real interest rates. The adjustment of the capital stock is non‐monotonic. Employment and the short‐ and long‐term real interest rates may also adjust non‐monotonically. JEL classification: E22, E52, E58     

理性预期学派货币中性理论在中国的实证检验

利用中国1994年以来的经济数据,通过建立ARIMA模型和二阶段OLS模型对理性预期学派货币中性理论进行了检验。实证结果显示,短期内中国预期的货币供给冲击与非预期的货币供给冲击对产出都有显著影响,且非预期的货币供给冲击对产出影响更明显;但从长期看,预期货币与非预期货币对产出的正负效应相互抵消,中国货币政策表现为长期渐近中性。     

中国货币供应量的产出、通货膨胀效应实证分析

采用中国1978～2008年的年度数据,运用VAR模型实证分析中国货币供应量政策对总产出和通货膨胀的效应。主要进行了脉冲反应分析和方差分解分析,并结合中国货币供应量政策的特点,得出以下结论:(1)中国货币政策在短期内对产出有影响,在长期是中性的;(2)货币供应量无论在长期还是短期内都对物价具有系统性影响;(3)中国货币政策有效,但效果有限;(4)中国货币供应量受到物价和产出变动一定的影响,即货币供给具有一定内生性。     

MONEY HOLDINGS,INFLATION, AND WELFARE IN A COMPETITIVE MARKET*

This article examines an environment where money is essential and agents exchange in perfectly competitive, Walrasian markets. Agents consume and produce a homogeneous good, but hold money to purchase consumption in the event of a relatively low productivity shock. A Walrasian market delivers a nondegenerate distribution of money holdings across agents and avoids some of the computational difficulties associated with the market assumption of bilateral bargaining common to search‐theoretic environments. The model is calibrated to long‐run U.S. velocity, and the welfare costs of inflation are assessed for variable buyer–seller ratios and persistent states of buying and selling.     

Monetary Rules:A Preliminary Analysis*

This paper examines the effects of three simple rules for monetary policy in an econometric model of the Australian economy. Its main contribution is to examine such rules under a range of exogenous shocks to the economy. rather than over a particular historical episode. A second contribution is to show that, in the model used, the money supply may be controlled by variations in interest rates under official control. However. lags of two to four quarters are involved for the shocks considered in the paper. The results are consistent, in the short run, with those obtained by Poole—that is, it is sensible to fix the money supply when the shocks are ‘real’ and to fix the interest rate when the shocks are ‘financial’. In the medium to long run. however, it is shown that the variability of inflation and unemployment may be less when money is controlled even for a financial shock. These conclusions are strengthened if allowance is made for the ‘underwriting’ problem.     

Globalization,Financial Liberalization and the Behavior of the Long Run Money Demand in the Bangladesh Economy

ABSTRACT

The paper estimates the long run demand for money function in the Bangladesh economy using cointegration and the Vector Error Correction Modeling (VECM) technique. The cointegration results suggest that although the process of globalization has shown no significant impact on money demand by the fact that the foreign interest rate is seen as statistically not significant, the financial liberalization has an important impact, reflected in the statistically significant role of domestic interest rate, in influencing both M1 and M2 money demand. An estimate of VECMs also reveals the fact that the short run speed of adjustment is moderately influenced by the financial reform measures to establish the long run relation between money balances, income and domestic interest rates. The phenomenon of credit constraint in the context of a developing country has shown no significant role in influencing money demand, which may imply that the stage of financial development is getting higher level in the Bangladesh economy. The existence of exchange rate depreciation in the cointegration relation with the expected sign suggests that currency substitution is now effective in the monetary sector and, therefore, its impact should be considered in the Bangladesh monetary policy matrix.     

A Search Model of Unemployment and Inflation*

This paper introduces money into the standard labor‐matching model. A double‐coincidence problem makes money necessary as a medium of exchange. In the long run, a rise in the growth rate of money leads to higher inflation and higher unemployment, such that the long‐run Phillips curve is not vertical. The optimal monetary growth rate decreases with greater worker bargaining power, the level of unemployment benefits, and the payroll tax rate.     

The Rose-Wicksell model: Inside money,stability, and stabilization policies

This paper examines a Rose-Wicksell, as opposed to a Stein-Keynes-Wicksell, model of Monetary Dynamics. Here, all money is of the “pure credit,” or “inside,” variety. Suppliers of money (banks) do not suffer from money illusion just as demanders do not; their decision to supply real balances is, likewise, based on profit maximization. The stability properties of the model are derived both in the short and the growth runs. It is shown that if interest is paid on demand deposits and if this rate is manipulated by the Central Bank, according to the rate of inflation, then all sources of instability can be eliminated. Moreover, stabilization of the short run guarantees stabilization of the growth model.     

How justified is abandoning money in the conduct of monetary policy in Australia on the grounds of instability in the money‐demand function?

The role of money in the design and conduct of monetary policy has reemerged as an important issue in both advanced and developing economies, especially since the 2007 global financial crisis. A growing body of recent literature suggests that the causal relationship between money supply growth and inflation remains intact across countries and over time and that this relation is not conditional on the stability of the money‐demand function or whether money is endogenous or exogenous. Moreover, critical for a rule‐based monetary policy is the presence of a long‐run stable money‐demand function, rather than a short‐run money‐demand model that may exhibit instability for many reasons, including problems with estimating a money‐demand model with high‐frequency data. Provided that a stable money‐demand function exists, it could be useful to establish long‐run equilibrium relations among money, output, prices, and exchange rates, as the classical monetary theory suggests. Within this analytical framework, this paper addresses the question of whether money has any role in the conduct of monetary policy in Australia. The conventional wisdom is that the money‐demand function in Australia has been unstable since the mid‐1980s due to financial deregulation and reforms; this led to a change in the strategy of monetary policy for price stability in the form of inflation targeting that ignores money insofar as inflation and its control are concerned. This paper reports empirical findings for Australia, obtained from a longer quarterly data series over the period 1960Q1–2015Q1, which suggest that instability in the narrow‐money‐demand function in Australia was primarily due to the exclusion of variables which have become important in the deregulated environment since the 1980s. These findings are confirmed by an expanded form of the narrow‐money‐demand function that was found stable over the past two decades, although it experienced multiple structural breaks over the study period. The paper draws the conclusion that abandoning the monetary aggregate as an instrument of monetary policy in Australia, under a rule‐based monetary policy such as inflation targeting, cannot be justified by instability in the money‐demand function or even by lack of a causal link between money supply growth and inflation.     

Seasonal Cointegration and Long‐Run Neutrality of Money in the USA

Using the notion of seasonal cointegration and a monetarist model, this paper re‐examines the long‐run monetary neutrality hypothesis, based on the seasonally unadjusted quarterly data of the US over the period 1959Q1–2004Q4. The results indicate that money is cointegrated with price at all possible frequencies while real output is cointegrated with price only at an annual frequency. The cointegration between money and price at the zero frequency, and non‐cointegration between real output and money at all possible frequencies, suggests that money affects nominal but not real variables in the long run.     

Economic uncertainty,monetary uncertainty and the Korean demand for money

Economic uncertainty and monetary uncertainty are said to affect public’s holding of money in either direction. In this paper, we consider the Korean demand for money, and after including two GARCH-based measures of output uncertainty and monetary uncertainty, we show that both measures exert significant effects on the demand for money in Korea in the short run. However, only the adverse effects of output uncertainty lasts into the long run. Indeed, including the two uncertainty measures yield a stable demand for money in Korea.     

A note on nominal government expenditure targets

In IS-LM models, government expenditure is usually fixed in real terms. In this short note, we examine some of the implications of nominal government expenditure targets for both model stability and comparative statics. When a fixed money supply policy is in operation, nominal government expenditure targets may stabilize an otherwise unstable system. If this is the case, an increase in the nominal stock of money will reduce the price level in the long run.     

The 1997 Asian Currency Crisis,Financial Linkages,and the Monetary Policy of Japan

The evidence is examined that excessively liberal monetary policy by the Bank of Japan, before and after the financial collapse of Japan in 1992, may have led other East Asian economies into “over‐borrowing” and speculative investments, prior to the currency crisis in 1997–98. The authors test for cointegration and Granger causality between Japanese money supply M1 and the domestic investment of eight East Asian economies and Australia. US and German money supplies are also used as a benchmark. There is strong evidence that there are long‐ and short‐run causal relationships between the Japanese money supply and the domestic investment of the Asian crisis‐inflicted economies prior to 1997.     

THE DISTRIBUTION OF MONEY BALANCES AND THE NONNEUTRALITY OF MONEY*

Recent monetary models with explicit microfoundations are made tractable by assuming that agents have access to centralized markets after one round of decentralized trade. Given quasi‐linear preferences, this makes the distribution of money degenerate—which keeps the models simple but precludes the discussion of distributional effects of monetary policy. We generalize these models by assuming two rounds of trade before agents can readjust their money holdings to study a range of new distributional effects analytically. We show that unexpected, symmetric lump‐sum money injections may increase short‐run output and welfare, whereas asymmetric injections may increase long‐run output and welfare.     

Educational choice, endogenous inequality and economic development

This paper investigates the mechanics through which wealth may, in the long run, trickle down from the rich to the poor. In the presence of indivisibilities in investment of human capital and impossibility of borrowing money, investment in education is financed through an intergenerational transfer. In an OLG model where aggregate production requires capital and both skilled and unskilled labor, it is shown that the long run equilibrium outcome depends on the values of few key parameters. A complete characterization of the steady state is provided. Under some configurations of the parameter values a unique invariant equilibrium exists where inequality vanishes asymptotically. Under others, multiple equilibria exist and the equilibrium outcome crucially depends on the initial conditions of the system. These equilibria are characterized by a negative relationship between inequality and economic development.     

MONEY,SEARCH, AND BUSINESS CYCLES*

Monetary models that specify explicit frictions to generate money demand have been developed over the last 20 years and have been used to address many questions. In this article, I investigate the short‐run properties of a particular model considering a number of versions based on some modeling choices. All versions feature flexible prices. I find that in many aspects, both real and nominal, the model resembles other, more reduced‐form models. Some variations of the model come closer to matching some key nominal facts than a reduced‐form model. The model also generates counter cyclical markups, in line with the data.