Essays in international macroeconomics

• Main Author: Pizzati, Lodovico
• Format: Dissertation
• Language: English
• Published: ProQuest Dissertations & Theses 01-01-2000
• Subjects: Bias; Budgets; Central banks; Consumer Price Index; Consumption; Copyright; Currency; Decision making; Disinflation; Economic development; Economic impact; Economic theory; Economics; Employment; European Monetary Union; Fixed exchange rates; Floating exchange rates; Foreign exchange rates; Government spending; Inflation; Influence; Interest rates; Macroeconomics; Market equilibrium; Monetary policy; Money markets; National debt; Politics; Studies; Tax rates; Taxation; Taxes; Wages & salaries
• ISBN: 0599929715; 9780599929715

The purpose of this dissertation is to analyze certain macroeconomic issues that arise among interdependent economies. As national economies become increasingly open to international interactions, it is crucial to take into account the relationships among different economic agents and to examine the macroeconomic questions emerging from this international setting. The first chapter (Monetary Policy Coordination and the Level of National Debt) extends the Canzoneri/Henderson framework of monetary policy interaction to give a theoretical analysis of the role of national debt. High levels of national debt make a country less sensitive to foreign monetary policy, and in case of an aggregate shock to all interdependent economies, a country is advantaged when interacting with a debt-burdened country. If a central bank is subject to political pressure, it will experience a Gordon-Barro-like inflation bias, which can be transmitted to other economies only if the political dependence persists under a common currency area. Although there are specific implications for the European Monetary Union the conclusions of this study can be applied tother regions that may be considering a Common Currency Area. The second chapter (Monetary Policy Effects on European Industrial Sectors) is an empirical study that uses structural vector autoregressions to determine the effects of monetary policy shocks on different European industrial sectors. The purpose of this chapter is to explain why distinct national economies respond so differently to domestic monetary policy. The econometric analysis focuses on five European countries because of the implications for the European Central Bank. A common monetary policy in Europe affects each national economy differently, and it is important to understand the nature of this discrepancy. Moreover, this study presents some empirical evidence to quantify the importance of the exchange rate channel. The third chapter (Disinflation and the Supply Side) looks at the effects of disinflation programs on a small open economy. The theoretical model focuses on a developing country facing imperfect world capital markets, and the effects of a temporary and permanent reduction in the nominal devaluation rate on output, consumption and investment are numerically simulated. Particular attention has been placed on explaining the empirical evidence from devaluation programs by modeling the supply side of the economy.