In undergraduate international economics coursework students are often exposed to the IS-LM-BP model via diagrammatic analysis. The model itself presents the intuitive mechanics behind how an open economy functions and is generally regarded as useful to policy makers. The goal of this paper is to present an in-depth investigation of the IS-LM-BP model through algebraically representing its components. Our model features a two-country framework with sticky prices and flexible exchange rates. We display some interesting relations between factors that must hold in order for monetary and fiscal policy to be effective. Additionally, a peak at a possible extension to the model is presented in the last section.

This thesis principally studies the determination of UK export performance between the wars. Several improvements to the measurement of sterling's nominal and real effective exchange rate in the period are implemented, and the path of the exchange rate is related to UK and foreign exchange rate policies. The nature of competitiveness and the demand and supply mechanisms by which it may influence exports are discussed. In the light of this, and the commodity and geographical breakdown of UK exports, we suggest alternative measures of competitiveness which may appropriately be tested in econometric work. Aggregate UK export volume and price equations for the inter- war period are then estimated. Competitiveness, which is in turn influenced by the exchange rate, and the economic position of primary producing countries, are found to have had significant effects on UK export performance. Similarly specified equations are estimated for UK exports in eight industrial sectors. Distinctive characteristics of sectors may lead to substantial divergences between sectoral and aggregate behaviour. This is confirmed in further work on UK coal exports. Nevertheless, measures of the price of UK exports relative to the price of exports of other industrial countries generally give explanations of UK export performance which are superior to other competitiveness measures. A substantial statistical appendix containing data on, inter alia, UK and foreign exchange rates, trade volumes and values (with geographcial and commodity breakdown), labour costs and prices, together with the sources and methods used in their construction, is provided both for historical interest and to facilitate replication of results and further research.

The thesis assesses the costs and benefits of Namibia's membership of the CMA to determine whether the CMA is an optimal currency area at least from the perspective of Namibia. This issue is examined from two main perspectives: (a) whether real exchange rate (RER) adjustment is frustrated by the inability to use the nominal exchange rate as an instrument of adjustment. Evidence of persistent RER misalignment may be seen as a necessary condition for an independent nominal exchange rate regime, however, it is not sufficient.(b) In this case, we examine whether nominal devaluations will have sustained effects on RER adjustment, given Namibia's structural features, such as the high degree of openness and a small nontradable sector. An equilibrium RER for Namibia is estimated using a single equation model of RER determination. The model is used to compute RER misalignments to determine whether there are sustained long periods of misalignments. To test whether nominal exchange rates can be effective in changing relative prices, a simple model was developed to measure pass-through of foreign price and exchange rate changes to domestic prices and wages. This provides useful information regarding whether nominal devaluations can be sustained. The results show that RER misalignments have been small, while the extent and speed of pass-through is complete and instantaneous for most items, suggesting that nominal devaluations in Namibia are not likely to have real effects. Even if it was the case that monetary autonomy cannot be supported on grounds of affecting relative prices, it may nevertheless be important for Namibia to pursue an independent exchange rate strategy. To examine this possibility, the analysis was extended by looking at costs and benefits of OCAs which do not rely on the ability to change relative prices. Benefits arising from savings on transactions costs and on foreign exchange reserves amounted to 3.8% and 2.4% of GDP, respectively. Further, we demonstrated that past "shocks" between Namibia and South Africa were highly correlated. The findings of the thesis suggest that the CMA is an optimal exchange regime for Namibia.

This study investigates the degree of exchange rate pass-through to prices in different sectors for Turkish economy using Johansen Cointegration procedure. The study is based on quarterly data from 1994:1 to 2003:4. In this study it is concluded that the long-run exchange rate pass-through to overall wholesale prices for Turkey is very high and nearly complete. High pass-through degrees are also valid for different sub-sectors wholesale prices like private, public, manufacturing industry and energy. Moreover, it is detected that the prices set by public sector have higher exchange rate pass-through but longer adjustment period as compared to private sector prices.

In Folge der Osterweiterung der europäischen Union (EU) und der steigenden Arbeitsmarktintegration zwischen den EU15 und den neuen Mitgliedsstaaten ist die Lohnfindung in Mittel- und Osteuropa zu einem Schwerpunkt der europäischer Wirtschaftspolitik geworden. Zugleich wird das optimale Wechselkursregime für mittel- und osteuropäische Staaten kontrovers diskutiert. Die Dissertation befasst sich mit der Fragestellung, welche Wechselkursstrategie in Mittel- und Osteuropa vorzuziehen ist, um zum einen den Lohnfindungsprozess zu optimieren und zum anderen den Anpassungsprozess (Konvergenzprozess) an europäische Lohnstandards zu beschleunigen. Diese kumulierte Arbeit besteht aus vier unabhängigen Fachaufsätzen. Zuerst wird der Frage nachgegangen, welche Wechselkursstrategie einen optimalen Rahmen für die Lohnsetzung während des Aufholprozesses mittel- und osteuropäischer Staaten ermöglicht (Kapitel zwei). Im Kapitel drei wird die Rolle der Geldpolitik in Bezug auf die Lohnfindung in Staaten mit flexiblen Wechselkursen untersucht. Die Evaluierung der Prognosefähigkeit alternativer Konjunkturindikatoren für die Euro Zone sowie deren Implikationen für den Lohnverhandlungsprozess in Mittel-und Osteuropa ist Gegenstand der Analyse in Kapitel vier. Im fünften Kapitel wird der Rolle der Lohnpolitik auf Leistungsbilanz(un)gleichgewichte in Mittel- und Osteuropa nachgegangen. / After the Eastern enlargement of the European Union (EU) and increasing participation of labor between the EU15 and the new member states, wage determination in Central and Eastern Europe (CEE) has become a key issue in European economic policy making. At the same time there are controversial discussions regarding the appropriate exchange rate regime for the CEE countries. In this thesis it is examined which exchange rate strategy provides a more favorable framework for wage setting in CEE and leads to faster wage convergence in Europe. This thesis has four parts. First, it is analyzed which exchange rate strategy provides a more favorable framework for wage setting during the economic catch-up process of CEE (section two). Second, the role of monetary policy in wage determination in countries with flexible exchange rate regimes is examined in section three. Third, the predictive power of different euro area business cycle indicators is analyzed in section four. Fourth, the impact of wage determination on the balance of payments in CEE is scrutinized (section five).

This thesis models the Australian-US Dollar (AUD/USD) exchange rate with particular attention being paid to investor risk aversion. Accounting for investor risk aversion in AUD/USD exchange rate modelling is novel, so too is the method used to measure risk aversion in this thesis. Investor risk aversion is measured using a technique developed in Bliss and Panigirtzoglou (2004), which makes use of Probability Density Functions (PDFs) extracted from option markets. More conventional approaches use forward-market pricing or Uncovered Interest Parity. Several methods of estimating PDFs from option and spot markets are examined, with the estimations from currency spot-markets representing an original application of an arbitrage technique developed in Stutzer (1996) to the AUD/USD exchange rate. The option and spot-market PDFs are compared using their first four moments and if estimated judiciously, the spot-market PDFs are found to have similar shapes to the option-market PDFs. So in the absence of an AUD/USD exchange rate options market, spot-market PDFs can act as a reasonable substitute for option-market PDFs for the purpose of examining market sentiment. The Relative Risk Aversion (RRA) attached to the AUD/USD, the US Dollar-Japanese Yen, the US Dollar-Swiss Franc and the US-Canadian Dollar exchange rates is measured using the Bliss and Panigirtzoglou (2004) technique. Amongst these exchange rates, only the AUD/USD exchange rate demonstrates a significant level of investor RRA and only over a weekly forecast horizon. The Bliss and Panigirtzoglou (2004) technique is also used to approximate a time-varying risk premium for the AUD/USD exchange rate. This risk premium is added to the cointegrating vectors of fixed-price and asset monetary models of the AUD/USD exchange rate. An index of Australia???s export commodity prices is also added. The out-of-sample forecasting ability of these cointegrating vectors is tested relative to a random walk using an error-correction framework. While adding the time-varying risk premium improves this forecasting ability, adding export commodity prices does so by more. Further, including both the time-varying risk premium and export commodity prices in the cointegrating vectors reduces their forecasting ability. So the time-varying risk premium is important for AUD/USD exchange rate modelling, but not as important as export commodity prices.

Thesis (Ph.D.)--Auburn University, 2005. / Abstract. Vita. Includes bibliographic references (ℓ. 164-173)

Diss. (sammanfattning) Stockholm : Handelshögskolan, 2006.

Thesis (M.Com. (Economics & Economic History)) - Rhodes University, 2008. / A thesis submitted in partial fulfilment of the requirements for the degree of Master in Commerce (Financial Markets)

Thesis (M.S. Eco.)--Baylor University, 2008. / Includes bibliographical references (p. 68-70)