Gong, Liutang and Zou, Heng-fu (2012): Foreigh Asset Accumulation and Macroeconomic Policies.
Download (112kB) | Preview
In this paper, we have studies the effects of macroeconomic policies on foreign asset accumulation in a wealth effect model used by Bardhan (1967), Kurz (1968), Calvo (1980) and Blanchard (1983). Our results differ dramatically from the ones in Obstfeld (1981). In particular, we have shown that government spending always reduces foreign asset accumulation (or increases foreign borrowing). While Obstfeld's model turned the conventional Mundell-Fleming model on its head, our wealth effect approach has restored its validity.
|Item Type:||MPRA Paper|
|Original Title:||Foreigh Asset Accumulation and Macroeconomic Policies|
|English Title:||Foreigh Asset Accumulation and Macroeconomic Policies|
|Keywords:||Foreigh Asset Accumulation; Becker's Time Preference; Macroeconomic Policies|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B22 - Macroeconomics
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy
|Depositing User:||Heng-fu Zou|
|Date Deposited:||18 Mar 2012 13:30|
|Last Modified:||27 Sep 2016 05:53|
Bardhan, P., Optimal Foreign Borrowing, in Essays on the Theory of Optimal Economic Growth, edited by Karl Shell, MIT Press, 1967.
Barro, R., (2003). Determinants of Economic Growth in a Panel of Countries, Annals of Economics and Finance 4, 231-274.
Blanchard, Olivier, Debt and Current Account Deficit in Brazil, in Financial Policies and the World Capital Market, edited by Aspe Armella, Dornbusch and Obstfeld, University of Chicago Press, 1983.
Brueckner, J. K. (2000). Fiscal Decentralization in Developing Countries: The Effects of Local Corruption and Tax Evation, Annals of Economics and Finance 1: 1-16.
Buiter, Willem, Time Preference and International Lending and Borrowing in an Overlapping-Generations Model,Journal of Political Economy 89, No.4, 1981, pp.769-797.
Calvo, Guillermo, Financial Opening, Crawling Peg and the Real Exchange Rate, mimeo, 1980.
Kurz, Mordecai, Optimal Economic Growth and Wealth Effects, International Economic Review 9, October 1968, pp.348-357.
Obstfeld, Maurice, Macroeconomic Policy, Exchange-Rate Dynamics, and Optimal Asset Accumulation, Journal of Political Economy 89, December 1981, pp.1142-1161.
______, Aggregate Spending and the Terms of Trade: Is There a Laursen-Metzler Effect, Quarterly Journal of Economics 97, 1982, 251-270.
______, Intertemporal Dependence, Impatience, and Dynamics. Journal of Monetary Economics 26, 1990, 45-75.
Solow, R. (2003). Reflections on Growth and Development, Annals of Economics and Finance 4, 219-229.
Turnovsky, Stephen, Domestic and Foreign Disturbances in an Optimizing Model of Exchange-Rate Determination, Journal of International Money and Finance 1985, pp.151-171.
____ ,Optimal Monetary Growth with Accommodation Fiscal Policies in a Small Open Economy, Journal of International Money and Finance, 1987, pp.179-193
Uzawa, Hirofumi, Time Preference, the Consumption Function, and Optimal Asset Holdings. In Value, Capital, and Growth, edited by J. N. Wolfe, Chicago: Aldine, 1968.
Yin, H., (2008). Fiscal Disparities and the Equalization Effects of Fiscal Transfers at the Country Level in China, Annals of Economics and Finance 9-1: 115-149.
Zhang, P., and Mann, X. (2011). The View from the Country: China's Regional Inequalities of Socio-Economic Development, Annals of Economics and Finance 12-1: 183-198