Open economy macrodynamics : an integrated disequilibrium approach

1 The Closed Economy: The Frisch or Keynes Paradigm? - 1.1 Introduction. - 1.2 Neoclassical macrodynamics: Supply-side inflation inertia and self-correcting unemployment dynamics. - 1.3 Keynesian macrodynamics: Textbook stagflation theory and beyond. - 1.3.1 Introduction. - 1.3.2 Medium-run IS-LM analysis? - 1.3.3 IS-LM-PC analysis proper. - 1.3.4 Local stability properties. - 1.3.5 Global analysis I: Floors and ceilings? - 1.3.6 Global analysis II: A kinked money wage Phillips curve. - 1.4 Conclusions and outlook. - 1.5 Reading list. - 1.6 Appendix: Keynes' notes on the trade cycle. - I Open Economy Macrodynamics in Historical Perspective. - 2 Classical Two-Country Dynamics: Pure Price Adjustments? - 2.1 Trade under the gold standard. - 2.2 Trade, specie flows and purchasing power parity. - 2.3 A one-good monetary model of international commodity trade. - 2.4 The monetary adjustment process. - 2.5 Currency devaluation: Short-, medium- and long-run effects. - 2.6 The two-commodity extension. - 2.7 The pure monetary model: Basic and advanced formulations. - 2.8 Unemployment in the Classical trade model. - 2.9 Conclusions. - 2.10 Reading list. - 2.11 Notation. - 2.12 Appendix: The Classical version of the Keynesian income-expenditure model. - 3 Keynesian Two-Country Dynamics: Pure Quantity Adjustments. - 3.1 Bretton Woods, Phase I: The renewed evolution of international trade. - 3.2 The Keynesian approach to international trade. - 3.3 The two-country dynamic multiplier model. - 3.4 Currency devaluation in the multiplier model. - 3.5 Metzlerian inventory dynamics in the symmetric two-country case. - 3.6 Conclusions. - 3.7 Reading list. - 3.8 Notation. - 3.9 Appendix: The Keynesian version of the income-expenditure model. - 4 Output, Interest and Changing Exchange Rate Regimes. - 4.1 Bretton Woods Phase II: Trade and increasing capital mobility. - 4.2 The textbook Mundell-Fleming model. - 4.3 Monetary policy. - 4.4 Fiscal policy. - 4.5 Two-country Mundell-Fleming models: Basic aspects and extensions. - 4.6 Conclusions. - 4.7 Reading list. - 4.8 Notation. - 4.9 Appendix: The Mundell-Fleming-Tobin approach to small open economies. - 5 Exchange Rate Volatility. - 5.1 Capital mobility, flexible exchange rates and the role of expectations. - 5.2 Exchange rate dynamics in the IS-LM-PC model: Level-form analysis. - 5.2.1 The model and its stationary state. - 5.2.2 Comparative static analysis. - 5.2.3 Graphical representation and fundamental implications. - 5.3 Exchange rate dynamics in the IS-LM-PC model: Loglinear analysis. - 5.3.1 Loglinear representation and analysis. - 5.3.2 Myopic perfect foresight and learning. - 5.3.3 Imperfect capital mobility. - 5.4 Rational expectations IS-LM-PC dynamics. - 5.4.1 The case of the small open economy. - 5.4.2 A symmetric two-country analysis. - 5.4.3 A critique of the 'rational expectations' methodology. - 5.5 Exchange rate dynamics in the Dornbusch model: The most basic case. - 5.6 Conclusions. - 5.7 Reading list. - 5.8 Notation. - 5.9 Appendix: A Keynes-Wicksell reformulation of exchange rate dynamics. - II Keynes-Metzler-Goodwin Dynamics in Open Economies. - 6 KMG Model Building: The Baseline Case of a 'Closed' US-Economy. - 6.1 Introduction. - 6.2 Reformulating Keynesian AS-AD Macrodynamics. - 6.2.1 The 3D Rose type wage-price dynamics. - 6.2.2 The 2D Metzlerian quantity dynamics and capital stock growth. - 6.2.3 Putting things together: The KMG growth dynamics. - 6.2.4 Feedback-motivated stability analysis. - 6.3 Monetary Policy in KMG Growth Dynamics. - 6.3.1 Introducing monetary policy rules. - 6.3.2 The dynamics with estimated parameters. - 6.3.3 Kinked money wage Phillips Curves. - 6.3.4 The role of monetary policy rules reconsidered. - 6.4 Conclusions. - 6.5 Appendices. - 6.5.1 Appendix 1: The KMG dynamics in extensive form. - 6.5.2 Appendix 2: Detailed proof of theorem 6.1. - 7 Large Open KMG Economies: Germany within the EMU. - 7.1 Introduction. - 7.2 The model in extensive form. - 7.3 Intensive form and steady state analysis. - 7.4 Feedback motivated stability analysis. - 7.5 Monetary policy rules to fight inflation in the dominant country. - 7.6 Conclusions and Outlook. - 8 Small Open KMG Economies: Australia and the Murphy model. - 8.1 Introduction. - 8.2 The small open economy: The model. - 8.3 The core 8D dynamics: Assumptions and intensive form. - 8.4 The five feedback mechanisms of the model. - 8.5 Steady state and stability propositions. - 8.6 Rigorous 8D stability proof. - 8.7 Numerical simulations of the dynamics. - 8.7.1 Numerical simulations of the 8D dynamics. - 8.7.2 Adding sluggish trade balance adjustments. - 8.7.3 The kinked money-wage Phillips Curve reconsidered. - 8.7.4 Period-doubling routes to chaos. - 8.8 Conclusions. - 8.9 Appendix 1: The KWG simplification of the KMG approach. - 8.10 Appendix 2: Rigorous stability proof for the KWG case. - 9 Global Stability: Subsystem Approaches. - 9.1 Introduction. - 9.2 Dornbusch type exchange rate subdynamics. - 9.3 Metzlerian output-inventory interaction. - 9.4 The Tobin real-interest-rate inflation dynamics. - 9.5 The Rose real-wage feedback channel. - 9.6 Outlook: 3D and 4D extensions of the 2D cases. - 10 Two-Country Business Cycle Models: 'Euroland and the USA'. - 10.1 Introduction. - 10.2 Two interacting KWG economies. - 10.3 The core 10D KWG growth dynamics. - 10.4 Steady state and ? -stability analysis: Overview. - 10.5 Rigorous 10D stability proof. - 10.6 Numerical investigation of the KWG dynamics. - 10.7 Outlook: From 10D KWG to 14D KMG growth and beyond. - 10.8 Appendix to section 10.5. - Mathematical Appendix: Some useful theorems. - Notation (for part II). - References.