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Dynamic Analysis Of Open Economies
- 1st Edition - November 12, 2012
- Editor: Masanao Aoki
- Language: English
- Paperback ISBN:9 7 8 - 0 - 1 2 - 4 1 2 1 7 0 - 6
- eBook ISBN:9 7 8 - 0 - 3 2 3 - 1 4 0 8 0 - 5
Dynamic Analysis of Open Economies focuses on the dynamic behavior of open economies in general, and dynamic interactions among several interconnected economies in particular. The… Read more
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Request a sales quoteDynamic Analysis of Open Economies focuses on the dynamic behavior of open economies in general, and dynamic interactions among several interconnected economies in particular. The emphasis is on the techniques of dynamic analysis and on the dynamic responses of models of open economies. This book is organized into three sections and consists of 15 chapters that examine how macroeconomic policy instruments affect open economies under flexible exchange rate regimes and the extent to which interdependence of national economies affects assessment of national policy effectiveness in a dynamic context. The behavior of open economies is analyzed not only at the instant of exogenous shocks or changes in instruments, but also after some time has elapsed since the last impacts. In considering the importance of dynamics, the book describes the behavior of a wide range of models and draws general conclusions. A set of techniques associated with variational analysis and perturbation theory is developed and systematically applied to models of open economies. This section also offers an analytical innovation for dealing with models of the world that are composed of several countries and demonstrates the usefulness of path controllability. The remaining chapters are devoted to models of small open economies and two- and multiple-country models of the world, paying particular attention to monetary policy and its distributional effects. Students and practitioners of applied mathematics and econometrics will find this book extremely helpful.
Preface
Scope of the Investigation
Notation
List of Symbols
Part One Analytical Concepts and Tools of Comparative Dynamic Analysis
1 State-Space Representation of Dynamic Models
1.1 Analytical Models
1.2 State-Space Representation
1.3 Notion of Equilibrium and Long-Run Policy Implications
1.4 Example: A Balanced Growth Path of a Small Open Economy
2 Variational Methods in Comparative Dynamic Analysis
2.1 Introduction
2.2 Reference Time Paths
2.3 Variational Equations
2.4 Sensitivity Analysis
3 Variational Dynamic Equation: An Example of Fiscal Policy in a Macroeconomic Model
3.1 Model
3.2 Momentary Equilibrium
3.3 Dynamics
3.4 Long-Run Equilibrium
3.5 Variational Relations: Shifting Momentary Equilibrium
3.6 Variational Dynamics
Appendix
4 Dynamic Policy Multipliers (Impulse Response Functions)
4.1 Dynamic Multipliers of Continuous Time Models
4.2 Discrete-Time Policy Multiplier
4.3 Multiplier in a Small Open Economy: An Example
5 How to Evaluate Structural Differences: Application of Perturbation Theory
5.1 Basic Procedure
5.2 Structural Perturbation Method
5.3 Choice of State Vectors in Models of Interdependent Economies
5.4 Example: Effects of Trade on National Incomes
6 Controllability and Theory of Economic Policy
6.1 Controllability
6.2 Path Controllability
6.3 Policies with No Spill-Over Effects
6.4 Stabilizability
6.5 Example
7 Linkages of National Economies
7.1 Introduction
7.2 Interest Rate Linkage
7.3 Price Linkages
7.4 Terms-of-Trade Linkage
7.5 Expectations
8 Sources of Dynamics and Their Interactions
8.1 Variational Dynamic Equations
8.2 Example
8.3 Regressive Expectations and Consistency cum Stability
8.4 Example
Part Two Small Open Economies
9 A Growing Economy: Influences of Capital Growth on the Dynamic Multiplier
9.1 The Model
9.2 Fiscal Multipliers
9.3 Numerical Example
9.4 Discussions and Summaries
10 Stabilization Policies in a Small Open Economy
10.1 The Model
10.2 Long-Run Equilibrium
10.3 Variational Differential Equations
10.4 Short-Run Stability of the Variational Dynamics
10.5 Policy Reaction Functions
Appendix
Appendix
11 Short-Run Comparative Dynamic Analysis of a Small Open Economy with Variable Wage Rates
11.1 The Model
11.2 Long-Run Equilibrium
11.3 Short-Run Analysis
11.4 Are Variable Wage Rates More Inflationary? An Example of Structural Perturbation Analysis
11.5 Numerical Examples
11.6 Elaborations
Appendix The Variational Disposable Income Expression
Part Three Multiple-Country Models of the World
12 Two-Country Model: A Preliminary Analysis
12.1 Implications of Structural Differences
12.2 Distributional Effects of Monetary Policies
13 Monetary Policies in a Two-Country Model of the World
13.1 Introduction
13.2 Structural Perturbation Analysis
13.3 Policy Sensitivity and Distributional Effects
13.4 The Model
13.5 Reduced Form Equations of the Reference Variational Model VMo
13.6 Dynamics of the Reference Model
13.7 Dynamics of VM
13.8 Policy Effects
13.9 Elaborations on the Basic Model
13.10 Numerical Examples
Appendix Calculation of the Averages and the Differences
14 Two-Country Model of the World under Key Currency Regime
14.1 Introduction
14.2 The Model
14.3 Variational Dynamics
14.4 Stability Analysis under Rigid Wage Rates
14.5 Stability: Flexible Wage Rates
14.6 Elaborations on the Basic Model
Appendix
Appendix
Appendix
15 Interdependence in a Three-Country Model
15.1 Introduction
15.2 The Model
15.3 Benchmark Model
15.4 Nonsymmetrical Model: Distributional Effects of Instruments
15.5 Nonsymmetrical Model: Monetary Union
Appendixes
A Dynamic Multipliers of ARMA Model
B Disposable Income Calculation
C Regressive Expectations and Perfect Foresight Assumption
D Short-Run Stability of Variational Equations
E Calculation of the Transition Matrix
F Perturbation Analysis of Matrix Exponential Functions
References
Index
- No. of pages: 368
- Language: English
- Edition: 1
- Published: November 12, 2012
- Imprint: Academic Press
- Paperback ISBN: 9780124121706
- eBook ISBN: 9780323140805
MA
Masanao Aoki
Affiliations and expertise
School of Engineering and Applied Science, University of California, Los Angeles, U.S.A.