The liquidity effect and money demand

Article Abstract:

The real effects of an unexpected money shock on employment and output are examined using a monetary model. In this model of liquidity effects, aggregate economic activity determines financial intermediation costs. A persistent contraction in the loan-deposit rate spread, a persistent real expansion and a persistent liquidity effect arise due to an expansion monetary shock. Such an expansion also induces nominal prices to respond sluggishly to monetary shocks as an equilibrium outcome.

Public Finance Activities, Fiscal Policy, Econometrics & Model Building, Models, Employment, Econometrics, Externalities (Economics), Liquidity (Finance), Industrial productivity, Economies of scale, Money demand, Business models

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Monetary policy in emerging markets: can liability dollarization explain contractionary devaluations?

Article Abstract:

Virtually all international bond issues and syndicated bank loans are denominated in large country currencies. Exchange rate volatility may affect the developing country firmsE balance sheets. The paper suggests a qualitative, sticky price small open economy model, which predicts contraction trends on monetary policy induced devaluation and indicates that fixed exchange rates offer more stability.

Hong Kong, Economic aspects, External debts

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Exchange rate regime durability and performance in developing versus advanced economies

Article Abstract:

A new approach to examine the durability and performance of alternative exchange rate regimes in developing and emerging market economies is presented.

United States, Industrialized Countries, Comparative analysis, Industrial nations, Emerging markets

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