Abstract With a rapid market opening and structural reforms, Chinese economy has made great progress since 1978. A shortage of the necessities in product markets has been changed into overproduction and insufficient demand. An issuing of national debts in capital markets and then an opening of stock and foreign exchange tradings initiate the operations of stock, mutual fund, and futures markets. Thus applicability of IS-LM model in the analysis of Chinese economy is more plausible at the present time for the rapid development of Chinese capital market and the rising financial innovation activity than in the past. The objective of this thesis is to investigate the effectiveness of monetary policy by Chinese central bank with its economic reforms for 25 years. The important results of this study are as follows. First, unit roots of money supply, real gross domestic product and interest rates are present using the ADF test and the PP test. From Johansen-Juselius MLE test, we find a long-run equilibrium co-integration relationship among these three variables examined. Second, for 1978~2001, 1991~1992 and 1996~2000 periods, what actually causes different slopes of the LM curve is the income factor, and for the other periods, that is the interest rate factor, which means that the income factor first moves vertically and the interest rate factor moves then horizontally as increases in money supply shifts the LM curve outward. Finally, in the estimation of money demand elasticities with respect to income and interest rate, the long-run estimates of income elasticity are far greater than one, which implies money is an extreme luxury good in China. The interest rate elasticity estimates, however, exhibit a huge volatility and with positive sign unexpected, which can possibly be explained by deflation and tremendous savings in China since 1993.

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Bachelor-Arbeit Univ. St. Gallen, 2007.

Šiame darbe nagrinėjama vyriausybės vykdomos fiskalinės politikos įtaką visuminei paklausai Lietuvoje. Darbe yra apžvelgiama vyriausybės vartojimo išlaidų bei visuminės paklausos komponentų pokyčiai nuo 1995 iki 2007 metų. Teorinėje dalyje aptariamos pagrindinės Keinsistinės teorijos, kurios nagrinėja fiskalinės politikos įtaką visuminei paklausai, naudojant IS-LM ir AD-AS modelius. Taip pat teorinėje dalyje yra parodoma biudžeto deficito mažinimo įtaka ekonomikai. Darbe atliekama regresinė analizė, kuri įrodo, kad egzistuoja statistiškai reišmingas ryšys tarp visuminės paklausos ir valdžios sektoriaus vartojimo išlaidų. Pabaigoje pateikiamos rekomendacijos, kaip sustiprinti biudžeto išlaidų poveikį visuminei paklausai. / In this thesis the relationship between fiscal policy and aggregate demand in Lithuania is investigated. The first part of the work shows changes of government consumption expenditure and components of aggregate demand in period 1995 - 2007. The theoretical part analyses the main Keynesian ideas which research relationship between aggregate demand and fiscal policy, using IS-LM and AD-AS models. Also theoretical part shows how the reduction of budged deficit influences interest rates, aggregate demand, prices. In the last part aggregate demand is regressed against government consumption expenditure, interest rates, inflation and income. Results suggest that there are statistically significant relationship between aggregate demand and government consumption expenditure. Finally some recommendations are made in the end of the work.

In Hicks’s IS-LM model, where it is assumed that production is determined in the goods marketand the interest rate is determined in the money market, when the marginal propensity to spend is greater than one, the IS has a positive slope. Modigliani (1944), Varian (1977) and Sargent (1987) determined that in this special case the IS-LM model is stable when the LM slope isgreater than the IS.In line with Samuelson (1941), this article shows that in this case the model is stable when the IS slope is greater than the LM slope. However, in this stable case the model does not have a useful economic meaning.One solution to this theoretical problem is to abandon the Keynesian adjustment mechanism and replace it with the Classical mechanism where the interest rate is determined in the goods market and production is determined in the money market. In this case, the IS-LM model is stable when the LM is steeper than the IS. / En el modelo IS-LM de Hicks, en el que se asume que la producción se determina en el mercado de bienes y la tasa de interés en el mercado de dinero, cuando la propensión marginal a gastar es mayor que uno, la IS tiene pendiente positiva. Modigliani (1944), Varian (1977) y Sargent (1987), determinaron que en este caso especial el modelo IS-LM es estable cuando la pendiente de la LM es mayor que la de la IS.En línea con Samuelson (1941), este artículo muestra que en este caso especial el modelo es estable cuando la pendiente de la IS es mayor que la de la LM. Sin embargo, en este caso estable, el modelo no tiene un significado económico útil.Una solución a este problema teórico es abandonar el mecanismo de ajuste keynesiano y reemplazarlo por el mecanismo clásico, donde la tasa de interés se determina en el mercado de bienes y la producción en el mercado de dinero. En este caso el modelo IS-LM es estable cuando la LM es más empinada que la IS.

No description available.

IS-LM methodology was not developed by Hicks alone. Hicks, together with Harrod and Meade jointly contributed to the idea of general equilibrium analysis of products and money markets which were separated treated by Keynes in his General Theory. In order to honor the contribution of the other two economists, we suggested that Hicksian IS-LM framework be renamed Harrod-Hicks-Meade IS-LM model. In IS-LM graphical analysis, the slopes of IS-LM curves and the effectiveness of fiscal and monetary policy are closed related. This thesis has surveyed domestic¡]in Chinese¡^and international¡]in English¡^economics textbooks thoroughly on this matter and discovered that the mistakes are often made or not even mentioned at all. The slope of LM¡]IS¡^curve is determined by interest rate factor , Li¡]Ii¡^and income factor, Ly¡]Cy¡^. If the interest rate factor causes the slopes of two LM¡]IS¡^curves to differ, the expansionary monetary¡]fiscal¡^policy will make LM¡]IS¡^curves horizontal shift to the right. As a result, monetary¡]fiscal¡^policy will be more effective if the LM¡]IS¡^curve is steeper. On the contrary, if the income factor is the cause of the different slopes, the same policy will make LM¡]IS¡^curves shift right vertically. Monetary¡]fiscal¡^policy will be more effective if the LM¡]IS¡^curve is flatter . Once Pigou Effect is present, the aggregate demand curve will become flatter. As a result, monetary¡]fiscal¡^ policy is more¡]less¡^effective than without. Hence, monetary policy is relatively more effective than fiscal policy. In general, a policy-induced shift of aggregate demand curve can¡¦t adopt the horizontal moving method, specifically, for monetary policy, we have to adopt the vertical moving method. As for fiscal policy, the vertical moving method should be adopted , if and only if the income factor causes the different slopes of aggregate demand curves. Neither horizontal nor vertical shift in aggregate demand can be taken for the case when interest rate is the reason leading to the different slopes of aggregate demand curves.

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.

The main goal of the thesis is to explore selected economical hypotheses through theoretical conception applying macroeconomics data from the Czech Republic. This thesis includes the following hypotheses: budget deficits solved by increasing taxes, compromise between unemployment and inflation, low impact of budget deficits. To verify these hypotheses, there is a comparison with economic theories such as Laffer curve, which has showed that Laffer peak is at the level of 22 % taxation. Other used theory is the Phillips curve where correlation between inflation and unemployment rate is stronger based on yearly data than on monthly data. Theoretical model IS-LM has confirmed that multiplication effect could have caused the positive economic growth in 2010 and 2011. Even if economical hypothesizes are partially correct, they are not recommended for the government to determine their decisions. There are more efficient long-term solutions that can be used to solve challenges of the recent economic situation.

The aim of this thesis is to examine whether repo rates have any impact on private consumption in Sweden. After the financial crisis in 2008, the repo rates in some periods become negative. Whether negative repo rates have impact on private consumption is an additional analysis in the thesis. In the theoretical framework the IS-LM model and some explicit hypothesis are derived. In the empirical part, data for repo rate, income, inflation and saving in Sweden are collected from 1995 to 2019 with a time unit of quarterly data. With the collected data one multiple linear regression is estimated and one additional test where the same model is modified with a dummy variable that isolates the periods with negative repo rates. In line with the theoretical prediction, the first multiple linear regression result exhibits that the repo rate has statistically significant negative impact on private consumption. The second multiple linear regression with the dummy variable shows that the impact of negative repo rates is not different from positive repo rate. Limitations and shortcomings are discussed in the section limitations and weaknesses.