In this dissertation, two questions concerning monetary policy under the Taylor rule have been addressed. The first question is on, under the Taylor rule, whether a central bank should be responsible for both bank supervision and monetary policy or whether the two tasks should be exercised by separate institutions. This is the main focus of Chapter I. The second question is on whether the Taylor rule plays an important role in explaining modern business cycles in the United States. The second question has been covered by Chapter II. The implications of the first chapter can be summarized as follows: (i) it is inevitable for the central bank to have a systematic error in conducting monetary policy when the central bank does not have a bank supervisory role; (ii) without a bank supervisory role, the effectiveness of monetary policy cannot be guaranteed; (iii) because of the existence of conflict of interests, giving a bank supervisory role to the central bank does not guarantee the effectiveness of monetary policy, either; (iv) the way of setting up another government agency, bank regulator, and making the central bank and the regulator cooperate each other does not guarantee the effectiveness of monetary policy because, in this way, the systematic error in conducting monetary policy cannot be eliminated; (v) in the view of social welfare, not in the view of the effectiveness of monetary policy, it is better for the central bank to keep the whole responsibility or at least a partial responsibility on bank supervision. In the second chapter, we examined the effect of a technology shock and a money shock in the context of an RBC model incorporating the Taylor rule as the Fed??s monetary policy. One thing significantly different from other researches on this topic is the way the Taylor rule is introduced in the model. In this chapter, the Taylor rule is introduced by considering the relationship among the Fisher equation, Euler equation and the Taylor rule explicitly in the dynamic system of the relevant RBC model. With this approach, it has been shown that, even in a flexible-price environment, the two major failures in RBC models with money can be resolved. Under the Taylor rule, the correlation between output and inflation appears to be positive and the response of our model economy to a shock is persistent. Furthermore, the possibility of an existing liquidity effect is found. These results imply that the Taylor rule does play a key role in explaining business cycles in the United States.

abstract: This paper presents a two-period general equilibrium model that incorporates the firm's learning-by-doing under the green subsidies. I use a dynamic version of the Dixit-Stiglitz monopolistic competition model to analyze the impact of the introduction of green subsidies in the presence of pre-existing effluent taxes. I first show that the introduction of green subsidies promotes the demand for green goods, and consumers are better off each period. I then show that even when the green subsidies directly accrue to consumers, firms in the green sector also benefit via boosted demand for green goods. The learning-by-doing effect accelerates the speed of expansion of the green sector in the face of green subsidies. On the other hand, even when the demand for the green goods increases, and greater pollution may result from meeting the increased demand as a whole, environmental quality may still improve if the technology is good enough to sufficiently boost the net positive impact of green consumption on the environment. / Dissertation/Thesis / M.S. Economics 2013

The first essay formulates a dynamic general equilibrium optimal control model of an energy crop as part of a country's planned resource use over a period of time. The model attempts to allocate consumption, production, and factors of production to achieve the country's sustainable development goal. A Cobb-Douglas specification is used for both utility and production functions in the model. We calibrate the model with Thailand data. The selected model is used to generate the stationary state solution and to simulate the optimal policy function and optimal time paths. Two methods are used: a linear approximation method and the Runke-Kutta reverse shooting method. The model provides numerical results that can be used as information for decision makers and stakeholders to devise an economic plan to achieve sustainable development goals. The second essay studies the effect of international trade and changes in labor supply, land supply, and the price of imported energy on energy crop production for bio fuel and food, as well as impacts on social welfare. We develop a dynamic general equilibrium model to describe two baseline scenarios, a closed economy and an open economy. We find that international trade increases welfare and decreases the energy price. Furthermore, resources are allocated to produce more food under the open economy scenario than the quantities produced under a closed economy assumption. An increase in labor supply and land supply result in an increase in social welfare. An increase in imported energy price leads to a welfare loss, higher energy production, and lower food production. The third essay develops a partial equilibrium econometric model to project the impacts of an increase in ethanol production on the Thai agriculture sector over the next ten years. The model is applied to three scenarios for analyzing the effect of government ethanol production targets. The results from the baseline model and scenario analysis indicate that an expansion in ethanol production will result in a significant increase in cassava production, price, and land use. The increase in cassava production will shift land use from maize and sugar cane, thus increasing in price of maize.

The aim of this study is to analyse the impacts of the social security system reform performed in Turkey within the

Submitted by Gustavo Quindere Saraiva (gqs007@gmail.com) on 2013-08-08T22:45:46Z No. of bitstreams: 1 Dissert_Gustavo.pdf: 1205214 bytes, checksum: e7415a09177c3999bf4b562101926770 (MD5) / Approved for entry into archive by Janete de Oliveira Feitosa (janete.feitosa@fgv.br) on 2013-08-19T17:59:44Z (GMT) No. of bitstreams: 1 Dissert_Gustavo.pdf: 1205214 bytes, checksum: e7415a09177c3999bf4b562101926770 (MD5) / Approved for entry into archive by Marcia Bacha (marcia.bacha@fgv.br) on 2013-08-22T13:13:48Z (GMT) No. of bitstreams: 1 Dissert_Gustavo.pdf: 1205214 bytes, checksum: e7415a09177c3999bf4b562101926770 (MD5) / Made available in DSpace on 2013-08-22T13:13:58Z (GMT). No. of bitstreams: 1 Dissert_Gustavo.pdf: 1205214 bytes, checksum: e7415a09177c3999bf4b562101926770 (MD5) Previous issue date: 2013-06-20 / This work consists on a survey of some papers from the literature of general equilibrium with default costs. We focus on the study of Kehoe and Levine (1993) and Alvarez and Jermann (2000) models. We also describe some adaptations of Al- varez and Jermann’s model, such as the models developed by Hellwig and Lorenzoni (2009) and Azariadis and Kaas (2008), and we compare them with Huggett’s (1993) model, where the market is exogenously incomplete. Finally, we point out one flaw present in Krueger and Perry’s (2010) algorithm to compute stationary equilibria from economies such as Alvarez and Jermann. / Neste trabalho fazemos um resumo de alguns artigos que tratam de equilíbrio geral dinâmico com custos de default. Focamos no estudo dos modelos de Kehoe e Levine (1993) e de Alvarez e Jermann (2000). Também descrevemos algumas adaptações do modelo de Alvarez e Jermann, como os trabalhos de Hellwig e Lorenzoni (2009) e de Azariadis e Kaas (2008), e comparamos os resultados desses modelos com os de Huggett (1993), no qual os mercados são exogenamente incompletos. Finalmente, expomos uma falha no algoritmo computacional sugerido por Krueger e Perry (2010) para se computar os equilíbrios estacionários de economias como as de Alvarez e Jermann (2000).

Penningtvätt är ett ämne som under de senaste åren fått mycket uppmärksamhet. Nya lagar och regleringar med målsättningen att förebygga och bekämpa penningtvätt har införts. För att uppskatta problemets storlek har ett flertal estimat beräknats med hjälp av olika metoder. I denna uppsats har vi valt att fokusera på de metoder som används för att beräkna estimat, då det finns tecken som tyder på att estimaten som beräknas sällan utsätts för kritik.Syftet med uppsatsen har varit att undersöka och jämföra tre av de idag vanligaste metoderna för att beräkna penningtvättens storlek. De vanligaste modellerna är Walkermodellen, Zdanowicz metoder för handelsbaserad penningtvätt och en två-sektor modell vilka har utgjort fokus i denna studie. Studien är av kvalitativ karaktär med en induktiv ansats där empirin består av de utvalda metoderna.Att göra en exakt mätning av storleken på penningtvätten är naturligtvis inte möjligt, utan det handlar istället om att göra en så bra uppskattning som möjligt. Resultatet av vår undersökning visar att de tre metoderna skiljer sig helt från varandra. Vilken metod som är lämpligast beror på sammanhanget, vilket är viktigt att ha i åtanke när någon tar del av de estimat som beräknats. Zdanowicz metod mäter exempelvis inte total penningtvätt för ett land, men är samtidigt den som bäst mäter kapitalförflyttning vid handel mellan länder. Av de tre metoder vi tagit upp i vår undersökning är Walkermodellen den som lämpar sig bäst för att beräkna penningtvätten globalt, men den har en svaghet i att den till stor del förlitar sig på experters kunskaper och erfarenheter. Två-sektor modellen har sin utgångspunkt i mikroekonomisk teori och får anses ha en högre reliabilitet än Walkermodellen, men går dock inte att tillämpa globalt på samma sätt som Walkermodellen. Två-sektormodellen mäter heller inte hur mycket pengar som tvättas mellan länder så som de andra två metoderna gör. / Program: Civilekonomprogrammet

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The four essays included in this dissertation are in the field of open economy Macroeconomics. Essays I, II and IV deal with a work-horse model in this field – a two-sector small open economy growth model with traded and nontraded goods. Writing down such a model requires an assumption about the role of traded and nontraded goods in domestic consumption and investments. While several empirical studies have looked at the consumption side, a systematic examination of the role of traded and nontraded goods in investments is missing. Essay I aims to fill this gap. Drawing on extensive empirical evidence, we show that aggregate investment expenditure shares on traded and nontraded goods are very similar in rich and poor countries. Furthermore, the two expenditure shares have remained close to constant over time, with the average nontraded expenditure share varying between 0.54-0.60 over the 1960-2002 period. Combined with the fact that the relative price of nontraded goods correlates positively with income and exhibits large differences across space and time, our findings suggest that investment can be modeled using the Cobb-Douglas aggregator. The results of this essay offer a new restriction for the two-sector growth model, which can alter the conclusions drawn from the model. To demonstrate this, we apply the new restriction to a study by Hsieh and Klenow (2003), which argues that differences in relative productivity between traded and nontraded sectors, i.e., the Balassa-Samuelson effect, is the main cause of higher PPP-adjusted investment rates in rich countries. With the restriction imposed on the model, no more than 25 percent of the differences in PPP-adjusted investment rates between rich and poor counties can be attributed to the Balassa-Samuelson effect. In Essays II and IV the same two-sector growth model is put to the test using the recent economic developments in countries of Eastern and Central Europe. Essay II investigates whether the two-sector growth model can explain the magnitudes and the timing of the trade flows in the Baltic countries. The model is calibrated for each of the three countries, which we simulate as small closed economies that suddenly open up to international trade and capital flows. The results show that the model can account for the observed magnitudes of the trade deficits in the 1995-2001 period. Introducing a real interest rate risk premium in the model increases its explanatory power. According to the model, trade balances will turn positive in the Baltic states around 2010. Essay IV starts by summarizing empirical regularities for the key aggregate real sector variables in the eight countries that joined the EU in May 2004. It is shown that, following the reforms in the early 1990s, real sector developments in all eight countries exhibit remarkable similarities. Interestingly, this is the case despite the fact that different reform policies were pursued in several dimensions (e.g., privatization, nominal exchange rate). Next, we show that a calibrated two-sector small open economy growth model can account for most of the real sector adjustments in early post-reform years. Empirical studies have found rapid traded sector productivity growth in Central and Eastern European countries over the last decade. When traded sector productivity growth is added to the model, it captures the development in all key real sector variables during the post-reform period. Finally, Essay III contributes to the study of financial crises in emerging markets. In contrast to the other essays, this paper develops a highly stylized theoretical model that allows us to study analytically government response to financial crises. In particular, Essay III develops a framework for analyzing optimal government bailout policy in a dynamic stochastic general equilibrium model where financial crises are exogenous. Important elements of the model are that private borrowers internalize only part of the social cost of foreign borrowing in the emerging market and that the private sector is illiquid in the event of a crisis. The distinguishing feature of our paper is that it addresses the optimal bailout policy in an environment where there are both costs and benefits of bailouts, and where bailout guarantees potentially distort investment decisions in the private sector. We show that it is always optimal to commit to a bailout policy that only partially protects investment against inefficient liquidation, both in a centralized economy and a market economy. Due to overinvestment in the market economy, the government's optimal level of bailout guarantees is lower than in the social optimum. Further, we show that, in contrast to a social planner, the government in the market economy should optimally bail out a smaller fraction of private investments when the probability of a crisis is higher. / Diss. Stockholm : Handelshögskolan, 2005 S. i-x: sammanfattning, s. 1-187: 4 uppsatser