The Cost Channel in a Small Open Economy: The Analysis of the Present Value Model
| Autor: | Hsu, Yalin, 許雅琳 |
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| Rok vydání: | 2011 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 99 Based on New Keynesian framework, the thesis attempts to incorporate financial market in a small open economy to derive the forward-looking Phillips curve, and examines the impacts of the interest rate on inflation dynamics through the cost channel of monetary transmission mechanism. Following Tillmann’s (2008)empirical approach, this paper uses present value model to derive the discounted sum of the future labor share of total income and domestic nominal interest rate, generating a fundamental inflation series, which compares to the actual inflation. Taking the data for Taiwan, Canada, and Australia data, the empirical evidence from estimated forward- looking Phillips curve shows that, the cost channel, firms pass through their increasing marginal cost of production into their goods price and eventually into increasing when interest rates raise; thereby the fundamental inflation can closely fit with the historic series of actual inflation. Besides, the results also verify that the strength of cost channel is more effective in a small open economy than that in closed, so that the fitness of the fundamental inflation is much better. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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