The Specification of Money Demand, Capital Mobility and Exchange Rate Misadjustment

• Main Authors: Chang Kai-Li, 張凱俐
• Other Authors: 張文雅
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/51552828787612482970

碩士 === 國立中正大學 === 國際經濟研究所 === 91 === This thesis extends the Chang and Lai (1997) framework to imperfect capital mobility and combine the analytical framework developed by Chang, Lai and Tsai (1999) to evaluate the exchange-rate adjustments following the anticipated permanent shocks under alternative mechanisms of price adjustment. The shocks are, for example, changes in a balanced-budget fiscal policy and the full-employment output. We focus on finding critical factors for exchange-rate misadjustment. Throughout the analysis, this thesis finds that not only the kind of anticipated shocks emphasized by Chang, Lai and Tsai (1999), but also the specification of money demand and the degree of capital mobility are critical factors for exchange-rate misadjustment regardless of whether the system is characterized by the global instability or by the saddle-point stability. If the trade balance is not a function of full-employment output and money demand is a function of national income in our model, then our results will degenerate to Frenkel and Rodriguez (1982). Obviously, the results of Frenkel and Rodriguez (1982) are just the special cases of our model.