a theory of current account and exchange rate determinations abstract the purpose of this paper is to construct a two period two country model that derives the current account the exchange rate the terms of trade and real interest rates from optimal behavior principles this is done by constructing a model that uses money mainly as a means of exchange where the technology of exchange is flexible due to potential substitutability of time and real balances as a means of coordinating transactions the discussion results in a framework that integrates elements of net saving theories and the monetary approach into a unified structure in which the two approaches are complementary viewpoints

equilibrium real exchange rates closed form theoretical solutions and some empirical evidence abstract this paper generates closed form theoretical solutions for the relationships among the real exchange rate relative per capita consumption and relative wealth in a stochastic dynamic general equilibrium model of two countries representative consumers the solutions offer insight into the robust cross sectional relationship between relative per capita gdps and relative national price levels established in kravis and lipsey 1983 1987 1988 in a manner consistent with equilibrium exchange rate theories and the productivity differentials model of balassa 1964 and samuelson 1964 application of panel data from summers and heston 1988 to the model s structural equations yields economically plausible estimates of the elasticity of intertemporal substitution the relative importance of nondashtradables in consumption and the rate of time preference in several oecd countries relative to that in the united states

speculation incomplete currency market participation and nonfundamental movements in nominal and real exchange rates abstract this paper studies possible nonfundamental movements in nominal and real exchange rates arising from a world economy with speculation incomplete participation in international currency markets and nontraded goods the model is capable of generating equilibria which display comovements in nominal and real exchange rates not unlike those observed in actual economies

an equilibrium theory of nominal and real exchange rate comovement abstract this study develops a quantitative equilibrium theory to offer an explanation of one of the most puzzling aspects of empirical exchange rate behavior the high degree of nominal and real exchange rate comovement technology shocks coupled with the accomodative response of monetary policy to output fluctuations are primarily responsible for the covariation between nominal and real exchange rates shocks to the marginal efficiency of investment also play an important role

international portfolio nondiversification and exchange rate variability abstract incomplete international portfolio diversification is implied by an equilibrium models of exchange rates with nontraded goods the model can also explain the greater correlation between consumption and income within a country than between consumption across countries nontraded goods make more stringent the elasticity conditions required to explain exchange rate variability resulting from current productivity disturbances though not from disturbances to fiscal policies or the prospective return to investment the model is also consistent with international real interest rate differentials changes over time in the current account and relative wealth across nations and observed time series properties of exchange rates

real exchange rates under alternative nominal exchange rate systems abstract the paper develops an equilibrium model of the determination of exchange rates the relative price of nontraded goods and the current account the focus is on the effects of various real and nominal disturbances and the conditions under which the nominal exchange rate system is neutral with respect to real variables in the economy the model demonstrates an assymetry in the roles of trade and nontraded goods in affecting exchange rates an econometric investigation of the raltion between the exchange rate system and the variability of real exchange rates provides some evidence against the neutrality hypothesis

real exchange rates and macroeconomics a selective survey the paper discusses real exchange rate issues of industrial and of developing countries for real exchange rates among the key industrial countries we ask what is the best conceptual framework to shed light on this question we look at alternative theoretical approaches and at empirical evidence on the relation among interest rates expectations and depreciation the discussion of developing countries real exchange rates focuses on the link between real exchange rates real wages and the profitability of capital the model highlights the discrepancy between the mobility of capital including in the long run physical capital and

budget deficits and the current account an intertemporal disequilibrium approach the objective of the present paper is to develop an intertemporal disequilibrium model of a monetary economy to explain the effects of fiscal policy on the current account we wish to emphasize the role of aggregate demand determined output fluctuations and flexible exchange rates within a microtheoretic optimizing framework furthermore the differing effects of monetary versus non monetary i e tax or bond finance of government expenditures are considered

time varying risk interest rates and exchange rates in general equilibrium under mild assumptions the data indicate that time varying risk is the primary force driving nominal interest rate differentials on currency denominated bonds this finding is an immediate implication of the fact that exchange rates are roughly random walks a general equilibrium monetary model with an endogenous source of risk variation a variable degree of asset market segmentation can produce key features of actual interest rates and exchange rates in this model the endogenous segmentation arises from a fixed cost for agents to exchange money for assets as inflation varies so does the benefit of asset market participation and that changes the fraction of agents participating these effects lead the risk premium to vary systematically with the level of inflation this model produces variation in the risk premium even though the fundamental shocks have constant conditional variances

effects of inflation on the pattern of international trade this paper integrates a transactions based model of money with a real trade model and examines how steady state inflation affects the direction and size of international trade the effects of inflation work through changes in supplies of labour and capital which are chosen jointly with production and consumption by utility maximizing households if production exhibits constant returns to scale in domestically mobile factors then it is unlikely that the economy will produce both of the two traded goods for certain rates of inflation small changes can have dramatic effects on the direction of trade for other rates of inflation the volume of trade is affected when money is held for transactions purposes and factor supplies are endogenous changes in inflation can cause changes in the pattern of trade that do not reflect real underlying changes in comparative advantage

floating exchange rates with liquidity constraints in financial markets abstract we construct a two country model in which there exist cash in advance constraints in commodity as well as in asset markets the seller s currency is used for transactions in commodity markets and the lender s money is used for transactions in the bond markets the exchange rate equation that emerges from this structure has a new feature it exhibits a bias towards depreciation of the borrowers currency we describe the equilibrium dynamics of this type of a world economy and show that it may exhibit cyclical movements

anticipated monetary policy in a cash in advance economy this paper analyses the effects of perfectly foreseen monetary policy within the framework of a standard cash in advance economy anticipated monetary policy is shown to have real effects by influencing inflationary expectations in a cash in advance economy an increase in the anticipated rate of inflation reduces the return to labour supply and induces a substitution away from time spent in the labour market the paper analyses the implication of this substitution for the time paths of output prices interest rates real and nominal and stock market prices

rediscounting private dollar debt and capital flight in ecuador abstract this paper presents an analysis of the impact of structural change on capital flight when the structural change constrains the monetary authorities ability to impose an inflation tax implications for the conduct of economic policy in open economies are drawn from the experience of ecuador

does economic growth in malaysia depend on disaggregate energy abstract this study aims to investigate long run relationship between economic growth and disaggregated energy consumption in malaysia toda yamamoto t y the modified granger causality test along with annual disaggregated energy and real gdp growth data from 1971 to 2014 was used in the investigation process this paper presents several outcomes firstly this paper argues that the malaysian economy is energy dependent and sensitive to energy supply shocks secondly the usage of energy inputs in malaysian economy is found to be consumed inefficiently meaning that usage of higher energy resources does not contribute the economic growth significantly rather causes environmental pollution badly thirdly the finding indicates that economic growth and environmental pollution through spreading carbon emissions are responsive to each other in this circumstance the malaysian economy has to find a way to consume the energy inputs efficiently so that economic growth is improved while negative externality in the environment is reduced therefore the study presents significant policy implications in order to improve the energy efficiency and reduce environmental pollution

the role of saving and investment in exchange rate determination under alternative monetary mechanisms abstract we argue that the demand for national currencies depends on existing payment arrangements for imports and exports therefore exchange rate movements depend on these arrangement as a result the relationship between exchange rate movements and various macroeconomic aggregates like saving and investment depend on what we call the monetary mechanism these points are explicitly demonstrated by studying two extreme monetary mechanisms one in which all payments are done with the seller s currency and one in which all payments are done with the buyer s currency

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

monetary expansion and real exchange rate dynamics this paper examines the effect of a change in the rate of monetary expansion on the dynamics of the real exchange rate under fully flexible domestic prices and a floating exchange rate the model is similar in structure to an ealier paper by calvo and rodriguez the main difference being that in our model consumers have an infinite planning horizon and long run perfect foresight one of the main findings is that an increase in the rate of monetary expansion has the impact effect of creating a real appreciation of the exchange rate and a deterioration of the balance of payments contrary to the results of calvo and rodriguez

consumption permanent income and financial wealth in canada empirical evidence on the intertemporal approach to the current account the intertemporal approach to the current account is rejected as a complete explanation of the canadian current account federal government fiscal policy plays an important role in the determination of the current account a private sector agent that treats its holdings of net liabilities of the federal government as net wealth accumulates the sum of these liabilities and the net liabilities of non residents as part of an intertemporally optimal plan this result indicates both fiscal policy and intertemporal considerations are important determinants of current account behaviour consommation revenu permanent et richesse financiere au canada resultats empiriques d une approche au compte courant mettant l accent sur la dimension intertemporelle cet article montre que l approche mettant l accent sur la dimension intertemporelle ne produit pas une explication complte du comportement du compte courant canadien i1 semble que la politique fiscale du gouvernement federal joue un r6le important dans la conformation du compte courant un agent economique prive composite qui traite son portefeuille de dettes nettes du gouvernement federal comme richesse nette va accumuler la somme de ces dettes et des dettes nettes des non residents dans le cadre de son plan intertemporel optimal les resultats montrent que la politique fiscale et des considerations intertemporelles sont des elements determinants du comportement du compte courant

global effects of national stabilization policies under fixed and floating exchange rates this paper deals with international effects of two types of stabilization policies monetary expansion directed towards the demand side and a reduction in payroll taxes directed towards the supply side the analysis focuses on employment relative prices and welfare issues it rests on a simple intertemporal general equilibrium model of two countries that includes a specific micro theory of money under floating exchange rates a country s employment is insulated from both policies abroad but its consumption generally changes under fixed exchange rates no such insulation prevails while monetary expansion is generally expansionary reduced payroll taxes constitute a beggar thy neighbor policy in both systems the welfare of a country may decrease although its employment increases an immiserizing expansion may occur

real transfers in fixed exchange rate systems and the international adjustment mechanism abstract fixed exchange rates can be maintained by different types of stabilization schemes this paper takes a look at some alternative institutional settings and shows that there is an inherent redistribution mechanism in some of them that will influence the world allocation of consumption an examination of the global adjustment to monetary disturbances illustrates some interesting implications of the institutional differences between alternative systems the results suggest that the description of the international adjustment mechanism under fixed exchange rates given by the monetary approach to the balance of payments is valid only under quite restrictive assumptions

anticipated devaluations currency flight and direct trade controls in a monetary economy mendation for a country facing a balance of payments deficit this advice is often resisted by country governments instead direct trade controls such as tariffs quotas and subsidies are frequently used in this paper i propose an economic explanation for the reluctance to devalue and the use of trade controls namely the currency flight that can be expected to occur if the devaluation is anticipated in an effort to avoid or offset the effects of this currency flight countries may use direct controls i shall analyze the properties of using import tariffs and export subsidies with or without an anticipated devaluation to affect the balance of payments and obtain the social optimum

precautionary saving and persistent current account imbalance abstract the neoclassical representative agent model attributes persistent current account imbalance to differences in time preference rates exogenous time preference yields corner solutions in which one country owns the world s wealth with endogenous time preference corners are avoided but at the cost of the intuitively unappealing assumption that wealthier agents are more impatient this paper shows that an agent with constant relative risk aversion utility subject to stochastic income shocks has a risk adjusted rate of time preference which is increasing in wealth precautionary saving falls as wealth rises allowing avoidance of corner solutions with an intuitively appealing assumption about behavior

dynamics of a floating exchange rate regime we study the full equilibrium dynamics of a two country world economy with a floating exchange rate traded and nontraded goods and explicit modeling of the use of money the resulting exchange rate equation depends on several details of the economic structure such as the supply structure and propensities to spend on various goods although real exchange rate movements have the usual association with the current account the ordinary exchange rate may appreciate or depreciate when there are deficits on current account even when the quantities of money do not change deviations from purchasing power parity and the fisher equation are shown to be the rule rather than the exception

key challenges and requirements for sustainable and industrialized biorefinery supply chain design and management a bibliographic analysis abstract the growing global population and its effects on world food security as well as the urgency for climate change mitigation are issues that foster technological social and political innovations to increase the efficiency of use of natural resources such as biomass among others while significant research efforts have been devoted to biomass conversion processes their associated supply chains and their implication for complete process efficiency have only been studied more recently however most of the recent investigations into the design and optimization of biomass supply chains have focused on an economic point of view sidelining other dimensions of sustainability which represents a serious drawback for this kind of work this article surveys the recent research on design and management optimization of biorefinery supply chains from a sustainability perspective 72 published research articles from 2006 to 2015 have been analyzed to highlight the sustainability dimensions considered as well as the inclusion of uncertainties a typology of decision making at three levels of analysis strategic tactical and operational and the specific set of tools used to model and optimize the biorefinery supply chain have also been studied the conclusion underlines the contributions and shortcomings of current research and suggests possible future directions

currency substitution in a production economy abstract this paper examines a small open economy with endogenous employment using an intergenerational model under floating rates risk averse workers enhance their welfare through currency substitution workers currency substitution behavior produces a phillips curve with anticipated exchange rate movement and domestic inflationary expectation as explanatory variables the dependence of the level of equilibrium employment on the terms of trade is demonstrated finally the association between exchange rates and current accounts is examined in relation to the role of money

capital flows investment and exchange rates abstract this paper incorporates international capital flows into a two country monetary general equilibrium model of asset prices with investment and production we calculate theoretical covariances between investment the current account the exchange rate and the terms of trade these covariances depend upon the coefficient of relative risk aversion the magnitude and sign of a country s net international indebtedness other properties of tastes and technologies and the stochastic processes on disturbances to productivity and monetary growth rates international capital flows arise from changes in world wealth and its relative composition in foreign and domestic assets