Substitution Between Private and Public Consumption in Australia*

Large increases in the private sector's savings ratio during a period of rapid growth in the relative size of the public sector has led to the suggestion that substitution between private and public consumption may be an important fcature of the Australian economy (Clements 1979). In this paper, empirical estimates are presented which indicate that no such substitution exists The estimates are derived from a theoretical model of consumption which is based on inter-temporal optimization in a stochastic environment. The estimates also suggest that private sector consumption behaviour is consistent with the joint hypothesis of rational expectations and Ricardian equivalence     

Unit Root Analyses of the Causality Between Japanese Money and Income

Unit root techniques and cointegration analysis have develop ed considerably in the last ten years. At the same time, the nonstationary test for Granger causality has been developed. We shed some new light on Japanese money supply and income causality by using nonstationary techniques. We specify univariate ARMA models of money, income, GNP deflator and rate of interest, initially by using the Dickey and Fuller (DF) or the augmented DF (ADF) tests. Two diagnostic tests are applied to each selected ARMA regression. One is the residual DF test, and the other is the moving average (MA) unit root test of residuals . After selecting the ARMA model, some causality tests are applied to the error correction model (ECM) of a vector autoregression (VAR) one of which is ordinary least squares (OLS) and another is the maximum likelihood (ML) method. The former requires only the standard F -test on the deleted variables in the ECM. The latter requires the Johansen's ML method in estimating cointegration. Causality is found to go from income to money supply but not the other way. Appendices include a simple implementation of the MA unit root test, a pedagogical proof of the Granger causality tests developed by Toda and Phillips (1993) and an interpretation of the test proposed by Toda and Yamamoto (1995).
JEL Classification Numbers: C32, E50     

A Note on Causality Between Money,Wages and Prices in Australia*

Lead and lag relationships between money, wages. and prices are examined using Australian data. Granger causality tests support univariate causality running from money to both wages and prices. This result is consistent with a monetarist explanation of inflation.     

Currency Substitution Between the Hong Kong Dollar and the Renminbi in South China

The present paper estimates the demand for the Hong Kong currency circulating in the Guangdong Province of China and Macau. The amount of Hong Kong dollars circulating in the Guangdong (Macau) region is reckoned to be 7.4 (3.2) percent of the total amount issued in Hong Kong. The estimated coeficients in the currency demand equation suggest that the Hong Kong currency in Guangdong is used mainly for transactions. Therefore, in spite of strong evidence of currency substitution of the Renminbi with the Hong Kong Dollar, its impact on the exchange rate and on the international reserves of Hong Kong during currency crisis should be minimal.     

"洗钱"与"反洗钱"

“洗钱”已经成为当今国际社会不得不面对的一个“公害”。据世界银行的一份统计,我国自改革开放以来,除了经政府合法批准对外投资的款项外,外流资金中有相当部分与“洗钱”有关。但直到目前为止,世界各国对于洗钱的定义还不尽一致,但一般是指将犯罪收益、不法收益通过各种手段隐瞒或掩饰起来,并使之合法化的活动和过程。各国司法界定的洗钱犯罪大致分为以下几类:一是将所有非法途径如贩毒、走私、抢劫、贪污、诈骗、受贿等方式获得的资金收益进行清洗,使之披上合法外衣的活动统称为“洗钱”。美国、法国等实行这一认定。二是将法律明确规定…     

Complementarity Between Money and Capital in a Developing Economy: A Test of Stability

The author argues that the success of a policy of financial liberalization in stimulating the rate of capital formation depends on the extent to which the demand for money and the investment functions are stable. Time varying parameter technique is used to test alternative specifications of the demand for money and the investment functions. The author concludes that a modified version of the McKinnon hypothesis explains the success of the monetary policy pursued by the Reserve Bank of India during the period under review. [310]     

Inflation Tax and Substitution Between Domestic and Foreign Assets: Evidence from Central-Eastern Europe

Dominant factors in determining real money holdings in Poland, Hungary, and Slovenia during a transition period characterized by high inflation are analyzed. Two hypotheses are tested. Cagan's model suggests that inflation-adjusted money balances are influenced almost exclusively by inflationary expectations. A competing model suggests that under highly inflationary conditions there is an incentive for agents to substitute foreign for domestic assets in their portfolios because of the higher expected return. Inflation expectation is a dominant factor in Poland. The expected return to holding foreign assets dominates in Hungary. Both factors have played important roles in Slovenia.     

Limits to Substitution Between Ecosystem Services and Manufactured Goods and Implications for Social Discounting

This paper examines implications of limits to substitution for estimating substitutability between ecosystem services and manufactured goods and for social discounting. Based on a model that accounts for a subsistence requirement in the consumption of ecosystem services, we provide empirical evidence on substitution elasticities. We find an initial mean elasticity of substitution of two, which declines over time towards complementarity. We subsequently extend the theory of dual discounting by introducing a subsistence requirement. The relative price of ecosystem services is non-constant and grows without bound as the consumption of ecosystem services declines towards the subsistence level. An application suggests that the initial discount rate for ecosystem services is more than a percentage-point lower as compared to manufactured goods. This difference increases by a further half percentage-point over a 300-year time horizon. The results underscore the importance of considering limited substitutability in long-term public project appraisal.     

论利率管制与货币供给量中介目标之间的矛盾

本文从货币当局无力同时控制利率和货币供给量的角度出发,探讨了利率管制与货币供给量中介目标之间的矛盾;分析了利率管制条件下,以货币供给量为货币政策中介目标,货币政策效果不佳,即实际货币供给量偏离中介目标货币供给量以及实际收入水平偏离最终目标收入水平的深层原因;指出了近年来我国货币供给量中介目标效果不佳,从根本上来说,是由我国客观存在的利率管制和货币供给量中介目标之间的矛盾造成的,是这种矛盾的必然结果.     

The Nature of Capitalist Money and the Financial Links Between Debt-Led and Export-Led Growth Regimes

The aim of this article is to develop a consistent theoretical approach to the financial links between the so-called debt-led (DLG) and ‘export-led’ (XLG) growth regimes. Assuming the endogenous supply of money and the unstable dynamics of financial markets, the leveraging process of DLG regimes is taken as an inherent dynamic of developed domestic financial systems, without the need of any external capital inflow. Foreign inflows are not a requisite for such expansions; however, attracted by high expected returns, they can play a key role in fueling DLG cases. Alternatively, current-account imbalances are not an indicator of the international financial flows but rather a side effect stemming from the productive, financial and trade links between DLG and XLG countries. Based on this approach, we study the relationship between changes in credit and current-account balances in several countries before and after the crisis of 2008. Both the observed general relationship of these variables for most of the countries, as well as some specific national cases ‘out of the norm’ are fundamental for understanding the national and international financial links between DLG and XLG models.     

Granger Causality Between Money and Income for the Japanese Economy in the Presence of a Structural Change

This paper examines Granger causality between money and income in the Japanese economy based upon a bivariate VAR model with a structural change in the trend function. We employ a stratified testing strategy incorporating preliminary tests for a unit root and for the order of cointegration rank. Our study reveals that the choice of either trend stationarity or difference stationarity, as well as the order of cointegration rank, crucially affect the test results for Granger causality. It is found that the causality from money to income was strong before 1980 but weakened or virtually disappeared after 1980; the opposite causality existed weakly before 1980 but not after 1980. The result confirms the claim by the Bank of Japan (1992) and Honda et al . (1995) among others that the role of money as a leading indicator for predicting movements in income has weakened or even disappeared in the 1980s.
JEL Classification Numbers: C32, E40     

Money and specialization

Summary.  This paper examines the relationship between specialization and the use of money in two versions of the search-theoretic monetary model. The first version establishes a surprising result that specialization is more likely to occur in a barter economy than in a monetary economy. The result is reversed in the second version where a different specification of preferences is adopted to limit the scope of barter. This contrast between the results provides a concrete illustration of the general argument that money encourages specialization only when it enlarges the extent of the market. Received: January 31, 1995; revised version August 12, 1996     

Money and Information

This paper investigates the role of money in markets in which producers have private information about the quality of the goods they supply. When the fraction of high-quality producers in the economy is given, money promotes the production of high-quality goods, which improves the quality mix and welfare unambiguously. When this fraction is endogenous, however, we find that money can decrease welfare relative to the barter equilibrium. The origin of this inefficiency is that money provides consumption insurance to low-quality producers, which can result in a higher fraction of low-quality producers in the monetary equilibrium. Finally, we find that most often agents acquire more costly information in the monetary equilibrium than in the barter equilibrium. Consequently, money is welfare-enhancing because it promotes useful production and exchange, but not because it saves information costs.     

Substitution and superstars

The existing superstar model (Rosen, 1981) does not require imperfect substitutes, and the convexity of total earnings with respect to talent is due to greater output for those with more talent. Our model explains why wages would increase at an increasing rate in talent. Imperfect substitutability between non-superstars and superstars with probabilistic production results in convexity in wage rates.     

Money demand in Hungary and Poland

This paper analyses the determinants and the stability of money demand functions in Hungary and Poland, using an error-correction framework. The null of stable cointegration relationships cannot be rejected in some specifications. The results suggest that long-run parameters are in line with economic theory. While judging the appropriateness of different strategies of monetary policy on the basis of these findings alone would be premature, the paper suggests that money demand functions can serve as a useful reference for monetary authorities.     

马克思经济学中的货币与资本

马克思经济学认为,资本主义经济生产的目的在于获取按货币价值计算的利润或货币增殖,而这种按货币价值计量的总量,来自于资本作为一种预付、是对劳动的支配这种特殊的资本性质。通过引入表明资本主义经济关系的统一的利润率(一种货币增殖的比率),马克思强调了资本主义经济作为一种总量上的货币经济的本质。而同样强调了货币重要性的凯恩斯,通过对货币的自己的利息率的论述,把货币的信用关系归之于资本主义特有的经济关系,其企图将价值、分配理论与货币理论联系起来以建立一种新的货币经济理论的尝试,可以从马克思的劳动价值论到货币论的推演中找到依据。因此,从这个意义上讲,马克思经济学与凯恩斯经济学在对资本主义经济中货币与资本的理解上有着共通之处。