Thesis advisor: Robert G. Murphy / Thesis advisor: Fabio Schiantarelli / Thesis advisor: James Anderson / This dissertation consists of four essays. The first two essays investigate macroeconomic fluctuations and their sources. The third and fourth essays examine international capital mobility. / Thesis (PhD) — Boston College, 1994. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

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Following Chang, Lai, and Chang(1999), this report discusses the policy assignment problem with efficient wage-employment bargaining under perfect capital mobility. Whether it can rescue the default of proposed by Ramirez (1988) that coordinate between fiscal and exchange rate policies to achieve given desirable targets. The conclusion of this report is as follows¡G Under fixed exchange rates with perfect capital mobility, however, an appropriate mixture between monetary and fiscal policies can dynamically adjust to attain simultaneously the internal goal of desired output and the external goal of official foreign reserves. It's conclusion as the same as proposed by Lai, Chang, and Chu (1990). But more importantly, it can rescue the default of proposed by Ramirez (1988) that coordinate between fiscal and exchange rate policies to achieve given the internal and external goals. Accordingly, we can understand that efficient wage-employment bargaining in the labor market plays a curial role in assessing the assignment or policy instrument to targets. Furthmore, this report extends the analysis results under fixed exchange rates shifting to the system of a managed floating regime. It can find that the policy assignment can still achieve given desirable target. Consequently, this report provides further evidence that the efficient wage-employment bargaining is very important for assignment problem.

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This dissertation attempts in three essays to contribute to the growing body of research on the problems associated with sudden stops of capital inflows, known to have been at the heart of many recent emerging market crises. It does this by developing basic models that can incorporate sudden stops and hopefully make policy relevant recommendations. The first essay develops a simple three date representative agent model of a small open endowment economy without money. It allows sudden stops to occur at date two and asks whether individuals in such a shock-prone world are still better off borrowing than in autarky. Unambiguously, this chapter shows that individuals are better off borrowing than in autarky and provides a tractable core model on which the later chapters build. The second essay then includes a long-term borrowing option as well as country-specific risk premia based on an information asymmetry between domestic borrowers and international lenders. This allows analysis of optimal maturity choices in a meaningful way. The intent is to address questions in the literature concerning whether emerging economies could enhance welfare by imposing short-term capital controls to encourage the use of longer-maturing debt and thus avoid the sudden stop. The results imply that short-term capital controls would generally lower welfare, even when sudden stops are fully anticipated. Finally, the third essay extends the horizon of the model and includes a much wider range of maturities. This allows one to start making sense of maturity bunching (when a country's debt all matures around a given date) which is known to exacerbate sudden-stop related problems. The model shows that maturity bunching can occur endogenously when both risk premia and uncertainty over the duration of the sudden stop are present.

Thesis advisor: Pablo Guerron / The dissertation examines how fiscal policies adjust to economic states in a growth model where productions are mobile across jurisdictions and the corresponding consequences. In my work, I study the properties of optimal state-level corporate and labor income tax rates and how shocks in the federal tax rates affect the economy; and I endogenize the federal-level fiscal policies in a Stackelberg game setting where the federal government is the leader and the states are the followers. In “Fiscal Competition and Federal Shocks”, I answer such the question of “how a shock to federal tax rate affect the macro-economy”. The innovation is that I take into account the effects of factor mobility, state-federal interaction, and state-state interaction on the transmission mechanism of the federal shocks. By using the U.S. data set, I find the evidence that state-level tax rates will respond to changes in federal tax rates (known as vertical competition) and the neighboring state's policies (known as horizontal competition). To rationalize this finding, I develop a two-region growth model with benevolent state governments, integrated capital market, and sticky migration. My quantitative result indicates that omitting the endogenous responses of state-level policies leads to significant difference in response to a federal shock. This means that the central policy make has to consider the intergovernmental fiscal relations when designing federal fiscal policies. In “Optimal Policies in a Federation”, I examine the optimal federal and state fiscal policies in a dynamic macro model with policy commitment, integrated capital market, and inter-state migration. In modeled governance system, the federal government is the Stackelberg leader, the state governments are the followers and take the leader's policies as given. In the interior-point steady-state, the overall tax rate on corporate income is zero. However, the leader and followers impose different tax rates. The leader levies a positive and high tax rate, the followers levy negative tax rates. The zero (overall) tax rate result holds when the states are heterogeneous in their TFPs. If the federal government has to impose the same labor income tax rate on the states, the federal tax rates are independent of the degree of inequality and each state has a zero overall corporate tax rate. IF the federal labor tax system is nonlinear, the states impose different tax rates. But the tax-base-weighted overall tax rate in the economy is still zero. In addition, I find that increasing the federal corporate tax rate is the optimal response to foreign country's TFP becomes higher. / Thesis (PhD) — Boston College, 2021. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

On the occasion of the thirtieth anniversary of China's economic transition, this thesis deals with several facets of the integration of Chinese domestic market over such an exciting era. Chapter 1 discusses first a variety of institutional reforms aimed at reinforcing the central control over regional affairs and improving the integration of domestic market. Several stylised facts about the local protectionism, which come from a recent survey implemented by a respected institution, are also illustrated in the chapter. Chapter 2 offers a brief review of the literature relative to China's internal integration. Generally speaking, the studies have proceeded along six major lines: similarity of production structure, price convergence, synchronization of business cycles, domestic trade linkages, interregional capital mobility and population migration. Chapter 3 examines the trade pattern within China. In the spirit of McCallum (1995), we find that after controlling for various traditional gravity factors, the trade flows within a Chinese province are 23 to 28 times as dense as those between provinces over the period of 1992-2003. Such findings suggest a highly fragmented product market within China. A trend toward market integration is, however, derived from the evolution analysis. The regressions by sub-period samples show that since the mid-1990s, the magnitudes of border effects have exhibited a dramatic decline. Chapter 4 investigates the capital mobility and capital allocation efficiency among Chinese provinces. We show first that the provincial savings and investment rates are significantly and positively correlated over the period of 1978-2006. According to the Feldstein-Horioka's argument (1980), this relationship can be interpreted as evidence of low capital mobility. Furthermore, by testing the causality between provincial aggregate investment and income, we fail to provide consistent evidence to support the hypothesis of efficient capital allocation in China. Chapter 5 addresses the labor force migration among Chinese regions. After a short introduction of reforms of hukou system, we derive a simple wage gap equation including education level, market potential and provincial border indicator as explaining variables. In using city and sector-level data, we find that other things being equal, the wage dispersions within provincial borders are significantly less pronounced than those among provinces over the period of 2003-2005. According to the law of one price, such findings imply a weak mobility of labor force among provinces.

The object of the study is Lithuanian financial market in the global context. The study aims to conceptualize the term of globalisation and by means of economic analysis principles to identify and comprehensively assess the impact of globalisation on the Lithuanian financial market. For this purpose the author has conducted a comparative analysis of the theoretical concepts of globalisation and has conceptualized the term of globalization from the paradigmatic aspect, analyzed and systematized the dimensions of globalisation, performed the analysis of quantitative assessments of globalisation, analyzed the phenomena and the causes of globalisation of financial markets and characteristics of modern financial markets, has identified and structured the indicators defining the level of globalization of financial markets, has analyzed the theoretical aspects of the impact of globalisation on today’s financial markets as well as the results of the empirical research conducted in this area. On the basis of the identified and systematized criteria, the author has developed a theoretical model targeted to assess globalisation, the application of which has helped to conduct the empirical study and assess the impact of globalisation on the Lithuanian financial market from legal, structural, monetary, and financial aspects. The qualitative and quantitative research findings have showed that the processes of globalisation significantly affect the Lithuanian financial market; it is... [to full text] / Disertacijos tyrimo objektas yra Lietuvos finansų rinka globaliame kontekste. Tyrimo tikslas yra konceptualizuoti globalizacijos sąvoką ir, remiantis ekonominės analizės principais, nustatyti ir kompleksiškai įvertinti globalizacijos įtaką Lietuvos finansų rinkai. Siekiant tyrimo tikslo, disertacijoje atlikta globalizacijos teorinių koncepcijų lyginamoji analizė ir konceptualizuota globalizacijos sąvoka paradigminiu aspektu, išanalizuotos ir susistemintos globalizacijos dimensijos, atlikta globalizacijos kiekybinių vertinimų analizė, ištirtos finansų rinkų globalizacijos priežastys ir šiuolaikinės finansų rinkos ypatumai, identifikuoti, išnagrinėti ir susisteminti finansų rinkų globalizacijos lygį nusakantys rodikliai, išanalizuoti globalizacijos įtakos šių dienų finansų rinkoms teoriniai aspektai ir šia tema atliktų empirinių tyrimų apie globalizacijos poveikį rezultatai. Atlikusi globalizacijos procesų kokybinių ir kiekybinių vertinimų teorinę-metodologinę analizę, autorė susistemino globalizacijos matavimo rodiklius ir sukūrė holistinį kompleksinį finansų rinkos globalizacijos vertinimo modelį. Juo remiantis autorė atliko globalizacijos įtakos Lietuvos finansų rinkai empirinį tyrimą ir įvertino, kaip globalizacija veikia Lietuvos finansų rinką. Atlikto kokybinio ir kiekybinio tyrimo rezultatai rodo, kad globalizacijos procesai daro reikšmingą įtaką Lietuvos finansų rinkai, ji tampa atviresnė, ne tik de jure, bet ir de facto, išauga kapitalo mobilumas, Lietuvos finansų... [toliau žr. visą tekstą]

Disertacijos tyrimo objektas yra Lietuvos finansų rinka globaliame kontekste.Tyrimo tikslas yra konceptualizuoti globalizacijos sąvoką ir, remiantis ekonominės analizės principais, nustatyti ir kompleksiškai įvertinti globalizacijos įtaką Lietuvos finansų rinkai. Siekiant tyrimo tikslo, disertacijoje atlikta globalizacijos teorinių koncepcijų lyginamoji analizė ir konceptualizuota globalizacijos sąvoka paradigminiu aspektu, išanalizuotos ir susistemintos globalizacijos dimensijos, atlikta globalizacijos kiekybinių vertinimų analizė, ištirtos finansų rinkų globalizacijos priežastys ir šiuolaikinės finansų rinkos ypatumai, identifikuoti, išnagrinėti ir susisteminti finansų rinkų globalizacijos lygį nusakantys rodikliai, išanalizuoti globalizacijos įtakos šių dienų finansų rinkoms teoriniai aspektai ir šia tema atliktų empirinių tyrimų apie globalizacijos poveikį rezultatai. Atlikusi globalizacijos procesų kokybinių ir kiekybinių vertinimų teorinę-metodologinę analizę, autorė susistemino globalizacijos matavimo rodiklius ir sukūrė holistinį kompleksinį finansų rinkos globalizacijos vertinimo modelį. Juo remiantis autorė atliko globalizacijos įtakos Lietuvos finansų rinkai empirinį tyrimą ir įvertino, kaip globalizacija veikia Lietuvos finansų rinką. Atlikto kokybinio ir kiekybinio tyrimo rezultatai rodo, kad globalizacijos procesai daro reikšmingą įtaką Lietuvos finansų rinkai, ji tampa atviresnė, ne tik de jure, bet ir de facto, išauga kapitalo mobilumas, Lietuvos finansų... [toliau žr. visą tekstą] / The object of the study is Lithuanian financial market in the global context. The study aims to conceptualize the term of globalisation and by means of economic analysis principles to identify and comprehensively assess the impact of globalisation on the Lithuanian financial market. For this purpose the author has conducted a comparative analysis of the theoretical concepts of globalisation and has conceptualized the term of globalization from the paradigmatic aspect, analyzed and systematized the dimensions of globalisation, performed the analysis of quantitative assessments of globalisation, analyzed the phenomena and the causes of globalisation of financial markets and characteristics of modern financial markets, has identified and structured the indicators defining the level of globalization of financial markets, has analyzed the theoretical aspects of the impact of globalisation on today’s financial markets as well as the results of the empirical research conducted in this area. On the basis of the identified and systematized criteria, the author has developed a theoretical model targeted to assess globalisation, the application of which has helped to conduct the empirical study and assess the impact of globalisation on the Lithuanian financial market from legal, structural, monetary, and financial aspects. The qualitative and quantitative research findings have showed that the processes of globalisation significantly affect the Lithuanian financial market; it is... [to full text]

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.