Currency Substitution、Real Exchange Rate and Dynamic Stability
| Autor: | Ming-Chen Lu, 呂明成 |
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| Rok vydání: | 2012 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 100 Recently, studies of currency substitution model with optimized microfoundation. We analyze the effects of trade elasticity、 currency substitution elasticity、and the cost elasticity of holding currency on dynamic system, based on the model of Tsaur and Huang (2005), by cash-in-advance approach but not money in the utility function approach. It shows that when the Marshall-Lerner condition holds, the adjustment of real exchange rates exists unique stable saddle path. However as the Marshall Lerner condition does not hold, the economic system will be unstable under the zero growth rate of foreign money. Moreover, if the foreign monetary growth rate is positive, and the currency substitution elasticity is the same with the cost elasticity of holding currency, then the economic system will be unstable as the currency substitution elasticity is smaller, and the adjustment of real exchange rates will be indeterminate while the currency substitution elasticity is large enough. Finally, if the currency substitution elasticity is different from the cost elasticity of holding currency, the adjustment depends on the relative magnitude between currency substitution elasticity and trade elasticity. When the currency substitution elasticity relatively small or the smaller trade elasticity with relatively large currency substitution elasticity, economic system will be unstable. However, as long as currency substitution elasticity and trade elasticity are large at the same time, the economic system may express indeterminate adjustment pathway. The analyzed conclusions by means of money in the utility function may be only some possibilities analyzed by cash-in-advance approach. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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