Real effects of monetary policy in a world economy

Article Abstract:

Monetary policy changes affecting real interest rates, relative prices and real exchange rates is studied with the presentation of a two-country, heterogeneous-agent model. Legal restrictions such as reserve requirements have nontransitory real effects on monetary policy. The model consistently depicts qualitatively the US experiences during the 1980s without violating the assumptions of individual rationality and flexible prices. A tight monetary policy led to a rise in interest rate and in the real value of the dollar initially and was reversed subsequently.

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Optimal income tax in a monetary economy

Article Abstract:

A model is presented for shaping an optimal income tax, assuming a monetary economy with money valued endogenously. An optimal real income tax is found to be progressive when using reasonable values of utility and production function parameters. Results indicate real income tax is dominated by nominal income tax, and also include a positive correlation of prices and taxes, among other findings. The model assumes a temporally constant population of overlapping generations of agents living for two periods.

Economic aspects, Income tax, Progressive taxation

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Monetary policy cooperation and multiple equilibria

Article Abstract:

Debate on the desirability of monetary policy cooperation among interdependent economies prompted a study on the significant aspects of policy cooperation in the presence of multiple equilibria that are believed to have been overlooked in research. The model can explain why low inflation countries have little interest in policy cooperation compared to their high inflation counterparts. It may also explain why cooperation between symmetric nations can break down.

Administration of General Economic Programs, Currency Stabilization Programs, Usage, Mathematical models, Currency stabilization, International cooperation

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