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This paper mainly focuses on one of the new specifications of Phillips curve family, the threshold Phillips curve. By estimating the threshold model using G7 plus Australia countries quarterly data, the threshold effect is confirmed only by U.S. and Canadian Phillips curves. No strong evidence for the threshold effect was found among other countries. Moreover, the estimation results for both standard and threshold Phillips curve model indicate weak trade-o relations between inflation and unemployment. Policy makers should review Phillips curve as a forecasting tool with extra caution. Future studies can focus on specific country's threshold effect testing with detailed explanation.

La thèse se compose de quatre chapitres, qui discutent les différents aspects d'élaboration de politique macroéconomique dans le contexte d'incertitude. Le premier chapitre est consacré à la politique monétaire robuste dans une union monétaire. Un grand nombre de recherches révèle l'importance de chocs spécifiques du pays pour la politique optimale dans une union monétaire. Cependant, ces chocs n'ont pas été étudiés par la littérature sur la politique optimale dans le contexte d'incertitude. Ainsi, le but principal de ce chapitre est de remplir cet espace et montrer que les asymétries entre les régions doivent être tenues en compte en élaborant la politique monétaire robuste. Dans notre recherche, nous utilisons un modèle New-Keynesian d'une union de deux pays qui est frappée par les chocs asymétriques. Pour ce modèle, nous tirons la politique monétaire robuste qui est raisonnablement bonne même pour le worst-case modèle. Nous trouvons l'effet d'atténuation d'incertitude en cas des chocs dans une région avec la plus forte stickiness des prix. Cela signifie que la banque centrale réagit à ces chocs moins agressivement quand l'incertitude est plus haute. Pour les chocs dans une région avec les prix plus flexibles, nous constatons une anti-atténuation effet de l'incertitude. Le deuxième chapitre explore le rôle de préférences gouvernementales incertaines dans un modèle d'interactions de politique monétaire et fiscale. Nous montrons que les effets d'incertitude de préférences sont liés à l'incertitude multiplicative de l'efficacité de politique. Si les effets de politiques monétaires et fiscales sont connus, l'incertitude de préférences n'alterne pas le résultat de symbiose d'interaction. Dans ce cas-là, l'inflation et la production sont égales à leurs cibles. L'incertitude multiplicative des effets de politique fiscale crée l'excès d'inflation. L'incertitude des effets de politique monétaire crée soit l'excès d'inflation soit l'excès d'inflation négatif avec la production plus haut que la cible et l'inflation plus bas que la cible. Dans ce cas-là, l'incertitude de préférences élargit la valeur absolue des excès. Après avoir étudié l'impact d'incertitude des excès de production et d'inflation, nous poursuivons les caractéristiques de bien-être dans l'équilibre et discutons le design optimale d'autorités pour les types différents d'incertitude. Le troisième chapitre étudie le rôle de l'information publique et privée dans les sociétés hétérogènes. La littérature qui étudie les impacts d'information sur le bien-être social est étendue. Néanmoins, la plupart de cette littérature est basée dans l'idée que l'économie est homogène, en signifiant que tous les agents sont frappés par les mêmes chocs fondamentaux. Dans ce chapitre nous développons une économie de deux régions avec les chocs idiosyncratiques. Pour ce modèle, nous élaborons l'équilibre, l'optimum social et régional et discutons les valeurs sociales, régionales et inter-régionales d'information. Après cela, nous appliquons cette méthodologie à un exemple de concours de beauté. Le dernier chapitre étudie des jeux de communication non-coopératifs étant joués par les autorités politiques dans une économie internationale. Chaque agent politique reçoit des signaux sur les chocs réels qui affectent les économies de pays. Cet agent peut révéler ou pas ces signaux reçus. Le modèle est caractérisé par un argument de concours de beauté dans l'utilité et des effets externes inter-régionales. L'équilibre non-coopératif n'est jamais caractérisé par opacité. La plaine transparence peut être le résultat d'équilibre et dans ce cas-là est Pareto-optimum. D'un point de vue normatif, opacité peut être Pareto-optimale: la valeur sociale d'information publique peut être négative dans les économies ouvertes aussi bien que dans les économies fermées. La révélation partielle est un résultat possible, mais jamais Pareto-optimu / The thesis consists of four chapters, which discuss the different aspects of macroeconomic policy elaboration under uncertainty.The first chapter is devoted to the robust monetary policy in a currency union. A great number of recent researches reveal the importance of country-specific shocks for the optimal policy in a currency union. However, these shocks have been completely overlooked by the literature on optimal policy under model uncertainty. Thus, the main purpose of this chapter is to fill this gap and to show that the asymmetries between regions have to be taken into account when elaborating robust monetary policy. In our research, we use a New-Keynesian model of a two-country currency union which is hit by asymmetric shocks. For this model, we derive the robust monetary policy which works reasonably well even for the worst-case model perturbations. We find the attenuation effect of uncertainty in case of shocks in a region with stronger price stickiness. This means that the central bank reacts to these shocks less aggressively when the extent of model uncertainty is higher. For the shocks in a region with more flexible prices, we find a anti-attenuation affect of model uncertainty.The second chapter discusses the optimal policy design in a game-theoretical framework. More precisely, this chapter explores the role of uncertain government preferences in a linear-quadratic model of fiscal and monetary policy interaction. We show that the effects of preference uncertainty are fastened on multiplicative uncertainty about the policy effectiveness. If the effects of fiscal and monetary policies on the economy are known, preference uncertainty does not alternate the symbiosis result of interaction. In this case, inflation and output are equal to their targets irrespective of the central bank and the government preferences. Multiplicative uncertainty about the fiscal policy effects creates the inflation bias. Multiplicative uncertainty about the monetary policy effects creates either standard inflation bias or negative inflation bias with output higher than the target and inflation lower than the target. In this case, preference uncertainty enlarges the absolute value of the output gap, while the effect on the inflation gap depends on the extent of monetary multiplicative uncertainty. After studying the impact of uncertainty on inflation and output gaps, we proceed with the welfare properties of the equilibrium and discuss the optimal conservativeness of authorities for different types of uncertainty.The third chapter explores the role of public and private information in heterogeneous societies. The literature which studies the impacts of information on social welfare, is extensive. Nevertheless, most of this literature is based on the assumption of homogeneous economy, meaning that all the agents are hit by the same fundamentals shocks. In this chapter we develop a two-region economy with idiosyncratic shocks. For this model, we derive the equilibrium, social and regional optimum and discuss the social, regional and inter-regional values of information. After that, we apply this methodology to a beauty contest example.The last chapter studies non-cooperative communication games being played by policymakers in an international economy. Each policymaker receives signals on the real idiosyncratic shocks which affect the country economies. It has the choice of revealing or not the received signals. The model is characterized by a beauty contest argument in the utility function and cross-border real spillovers. The non-cooperative equilibrium is never characterized by no revelation. A full transparency outcome may be the equilibrium outcome and is then Pareto-optimal. From a normative point of view, no revelation may be Pareto-optimal: the social value of public information may be negative in international economies as well as in closed economies. Partial revelation schemes are possible outcomes but never Pareto-optimal.

In the process of China's rapid economic growth, Chinese Communist Party implemented a series of macro-economic policies --- fiscal policies and monetary policies --- to regulate its economy. As a result, it safely passed through the Asian financial crisis in 1997 and the world financial tsunami in 2008, and was able to continue steady growth. This dissertation focuses, under the Chinese Communist economic system, on how to apply the macro policy to control its growth and what has been the practical impact. What role is macro-control playing in the process of China's economic development? Macro-economic policy is actually the main driving force behind China's economic performance. This dissertation emphasizes that under China's unique political economy, macro-control leads China's rapid economic growth. Nevertheless, due to China's economic structure of market imperfections, and the lack of inherent stability of the market mechanism, the Chinese macroeconomic regulation and control has easily lead to economic volatility and to a possible hard crash in years ahead. Although the experience accumulated so far has led to a relatively stable economy, the economic structure is still incomplete. This dissertation argues that China's macro-control¡¦s aggregate demand in driving China's economy needs to be adjusted from investment and export to personal consumption in order to contribute to sustainable economic development in the future.

This thesis is concerned with the development and use of a macroeconometric model for the Algerian economy between 1963 and 1984. The model was built because of a systematic lack of applied econometric studies pertaining to Algeria at both the macroeconomic and microeconomic level. It is hoped that the model will fill a gap in this area and will contribute to the much neglected field of applied econometric research with regard to Algeria. This lack of applied econometric studies for Algeria meant that the modelling exercise described here has had to rely on an extensive specification search based on evidence relating to Algeria's economic structure and policy, economic theory, and the experience of Less Developed Countries in the area of macroeconomic model-building. The lack of data was a major constraint in this area and part of this study consisted of collecting and compiling a large database. After the country's independence in 1962, Algerian macroeconomic policy aimed to create a strong industrial system and to satisfy the population's basic needs. It relied on heavy industrialisation to modernise the economy, oil revenues to finance development, and central planning as the major tool of macroeconomic regulation. The accumulation rate was high and the growth record was generally good. However high unemployment and inflation, considerable disequilibrium, low productivity, a vulnerable balance of payments and unsustainable external debt are the major macroeconomic problems that policy-makers have had to face. The model's equations were first estimated using the OLS method and were subjected to stringent statistical tests. The degree of test significance and parameter correspondence to a priori views on the economy was good. when the model was constructed, it was estimated using a 2SLS principal component method. The OLD results were found to be reasonably feasible. The equations were collected into a system of 63 equations and solved using dynamic simulation technique. The model was solved successfully and its tracking of historical data was reasonably good. Further tests were carried out to study its dynamic features. Having constructed the model, it was then used extensively to perform simulation analysis. The experiments ranged from those concerning the goverment's current expenditure to its monetary policy. In all, nine simulation exercises were carried out. These were revealing on the workings of the Algerian economy. The model was further used in scenario analysis. First the model was used to develop an ex ante forecast employing a linear trend model for the exogenous variables. The forecast database was used to generate multipliers. The policy analysis was constructed to coincide with the implementation of the Second Five Year Plan (1985-1989). The feasibility of the plan was examined by varying the price of oil according to three hypotheses. The aim of this test was to develop a realistic framework for applied macroeconomic analysis.

O ano de 2011 marcou o aniversário de vinte anos da criação do Mercosul. Apesar dos avanços vistos no início do período, marcados pela forte dinâmica comercial intrarregional e pelo estabelecimento da união aduaneira, o otimismo em relação ao bloco regional mostrou uma trajetória descendente ao longo dos anos. O ambiente de interdependência econômica proporcionado pela liberalização comercial passou a gerar efeitos não desejados e a demandar impulsos pró-integracionistas cada vez maiores para o cumprimento dos principais objetivos do Tratado de Assunção, o que, no mais das vezes, não ultrapassou o plano da retórica. Entre essas metas pouco desenvolvidas se encontrava a coordenação de políticas macroeconômicas, necessária ao aprofundamento comercial do bloco e capaz de prevenir os surtos protecionistas tão comuns entre os participantes, principalmente entre Argentina e Brasil, países-chave para o fortalecimento do Mercosul por seu peso econômico e político em relação aos dois vizinhos menores. Essa falta de coordenação macroeconômica, contudo, foi caracterizada por períodos de maior ou menor convergência entre as políticas econômicas dos dois países, o que teve consequências, respectivamente, mais ou menos benéficas ao processo de integração regional. Dentro dessa perspectiva, o objetivo geral do trabalho é definir de que forma as políticas macroeconômicas de Argentina e Brasil, ao longo do recorte de cunho político que põe de um lado o período neoliberal (1991-2002) e de outro o período com maior ativismo estatal (2003-2011), afetaram o processo de integração regional, medido pela evolução de seu comércio bilateral de mercadorias. Logo, surgem as seguintes perguntas: (i) houve similaridade nos desenhos macroeconômicos adotados por Argentina e Brasil ao longo dos vinte anos de existência do Mercosul? (ii) de que modo as crises cambiais vividas pelos dois países e as consequentes mudanças políticas ocorridas no interior de cada um alteraram seus modelos macroeconômicos? (iii) como, na ausência de um arcabouço cooperativo mais rígido, suas políticas macroeconômicas afetaram a evolução de seu comércio bilateral de mercadorias tomado, aqui, como Proxy para a integração regional? (iv) pode-se traçar uma relação positiva entre os principais planos econômicos adotados e as políticas comerciais mais ou menos protecionistas em relação ao vizinho? (v) quais são as formas mais plausíveis de coordenação de políticas macroeconômicas a serem adotadas por Argentina e Brasil? As respostas para essas perguntas são os principais objetivos específicos desse trabalho. / Mercosur has completed 20 years in 2011. Despite the advances seen at the beginning of the process, qualified by the strong intra-regional trade dynamic and by the custom union’s establishment, the optimism regarding to the regional bloc showed a downward trend over the years. The economic interdependent environment provided by the trade liberalization started to create unwanted effects and to demand increasing pro-integration impulses in order to accomplish the main objectives of Asuncion Treaty, which, in most cases, have not exceeded the rhetoric level. Among these undeveloped goals was the macroeconomic policy coordination, widely necessary to deepen the bloc’s trade and capable of preventing protectionists outbreaks so common among the participants, mainly between Argentina and Brazil, key-countries to the strengthening of Mercosur because of their political and economic influence. This lack of macroeconomic coordination, however, was characterized by phases of greater and lesser convergence between the two countries’ economic policies, which had results, respectively, more and less beneficial to the regional integration process. From this perspective, the aim of this paper is to define how the macroeconomic policies of Argentina and Brazil, along the outline that puts on one hand the neoliberal period (1991-2002) and on another a period when the state will play a bigger role (2003-2011), affected the regional integration, measured by their merchandise bilateral trade evolution. Therefore, the following questions arise: (i) was there any similarity in macroeconomic policies adopted by Argentina and Brazil during the twenty years of Mercosur? (ii) how do the exchange crises experienced by both countries and the consequent political changes occurred within each one altered their macroeconomic models? (iii) having in mind the absence of a more rigid cooperative framework, which ways their macroeconomic policies affect the evolution of their merchandise bilateral trade in? (iv) can we draw a positive relationship between the main economic plans of Argentina and Brazil and their more protectionist commercial policies regarding to their Mercour’s main neighbor? (v) what are the plausible macroeconomic policy coordination forms to be adopted by Argentina and Brazil? The answers to these questions are the main specific objectives of this paper.

O ano de 2011 marcou o aniversário de vinte anos da criação do Mercosul. Apesar dos avanços vistos no início do período, marcados pela forte dinâmica comercial intrarregional e pelo estabelecimento da união aduaneira, o otimismo em relação ao bloco regional mostrou uma trajetória descendente ao longo dos anos. O ambiente de interdependência econômica proporcionado pela liberalização comercial passou a gerar efeitos não desejados e a demandar impulsos pró-integracionistas cada vez maiores para o cumprimento dos principais objetivos do Tratado de Assunção, o que, no mais das vezes, não ultrapassou o plano da retórica. Entre essas metas pouco desenvolvidas se encontrava a coordenação de políticas macroeconômicas, necessária ao aprofundamento comercial do bloco e capaz de prevenir os surtos protecionistas tão comuns entre os participantes, principalmente entre Argentina e Brasil, países-chave para o fortalecimento do Mercosul por seu peso econômico e político em relação aos dois vizinhos menores. Essa falta de coordenação macroeconômica, contudo, foi caracterizada por períodos de maior ou menor convergência entre as políticas econômicas dos dois países, o que teve consequências, respectivamente, mais ou menos benéficas ao processo de integração regional. Dentro dessa perspectiva, o objetivo geral do trabalho é definir de que forma as políticas macroeconômicas de Argentina e Brasil, ao longo do recorte de cunho político que põe de um lado o período neoliberal (1991-2002) e de outro o período com maior ativismo estatal (2003-2011), afetaram o processo de integração regional, medido pela evolução de seu comércio bilateral de mercadorias. Logo, surgem as seguintes perguntas: (i) houve similaridade nos desenhos macroeconômicos adotados por Argentina e Brasil ao longo dos vinte anos de existência do Mercosul? (ii) de que modo as crises cambiais vividas pelos dois países e as consequentes mudanças políticas ocorridas no interior de cada um alteraram seus modelos macroeconômicos? (iii) como, na ausência de um arcabouço cooperativo mais rígido, suas políticas macroeconômicas afetaram a evolução de seu comércio bilateral de mercadorias tomado, aqui, como Proxy para a integração regional? (iv) pode-se traçar uma relação positiva entre os principais planos econômicos adotados e as políticas comerciais mais ou menos protecionistas em relação ao vizinho? (v) quais são as formas mais plausíveis de coordenação de políticas macroeconômicas a serem adotadas por Argentina e Brasil? As respostas para essas perguntas são os principais objetivos específicos desse trabalho. / Mercosur has completed 20 years in 2011. Despite the advances seen at the beginning of the process, qualified by the strong intra-regional trade dynamic and by the custom union’s establishment, the optimism regarding to the regional bloc showed a downward trend over the years. The economic interdependent environment provided by the trade liberalization started to create unwanted effects and to demand increasing pro-integration impulses in order to accomplish the main objectives of Asuncion Treaty, which, in most cases, have not exceeded the rhetoric level. Among these undeveloped goals was the macroeconomic policy coordination, widely necessary to deepen the bloc’s trade and capable of preventing protectionists outbreaks so common among the participants, mainly between Argentina and Brazil, key-countries to the strengthening of Mercosur because of their political and economic influence. This lack of macroeconomic coordination, however, was characterized by phases of greater and lesser convergence between the two countries’ economic policies, which had results, respectively, more and less beneficial to the regional integration process. From this perspective, the aim of this paper is to define how the macroeconomic policies of Argentina and Brazil, along the outline that puts on one hand the neoliberal period (1991-2002) and on another a period when the state will play a bigger role (2003-2011), affected the regional integration, measured by their merchandise bilateral trade evolution. Therefore, the following questions arise: (i) was there any similarity in macroeconomic policies adopted by Argentina and Brazil during the twenty years of Mercosur? (ii) how do the exchange crises experienced by both countries and the consequent political changes occurred within each one altered their macroeconomic models? (iii) having in mind the absence of a more rigid cooperative framework, which ways their macroeconomic policies affect the evolution of their merchandise bilateral trade in? (iv) can we draw a positive relationship between the main economic plans of Argentina and Brazil and their more protectionist commercial policies regarding to their Mercour’s main neighbor? (v) what are the plausible macroeconomic policy coordination forms to be adopted by Argentina and Brazil? The answers to these questions are the main specific objectives of this paper.

O ano de 2011 marcou o aniversário de vinte anos da criação do Mercosul. Apesar dos avanços vistos no início do período, marcados pela forte dinâmica comercial intrarregional e pelo estabelecimento da união aduaneira, o otimismo em relação ao bloco regional mostrou uma trajetória descendente ao longo dos anos. O ambiente de interdependência econômica proporcionado pela liberalização comercial passou a gerar efeitos não desejados e a demandar impulsos pró-integracionistas cada vez maiores para o cumprimento dos principais objetivos do Tratado de Assunção, o que, no mais das vezes, não ultrapassou o plano da retórica. Entre essas metas pouco desenvolvidas se encontrava a coordenação de políticas macroeconômicas, necessária ao aprofundamento comercial do bloco e capaz de prevenir os surtos protecionistas tão comuns entre os participantes, principalmente entre Argentina e Brasil, países-chave para o fortalecimento do Mercosul por seu peso econômico e político em relação aos dois vizinhos menores. Essa falta de coordenação macroeconômica, contudo, foi caracterizada por períodos de maior ou menor convergência entre as políticas econômicas dos dois países, o que teve consequências, respectivamente, mais ou menos benéficas ao processo de integração regional. Dentro dessa perspectiva, o objetivo geral do trabalho é definir de que forma as políticas macroeconômicas de Argentina e Brasil, ao longo do recorte de cunho político que põe de um lado o período neoliberal (1991-2002) e de outro o período com maior ativismo estatal (2003-2011), afetaram o processo de integração regional, medido pela evolução de seu comércio bilateral de mercadorias. Logo, surgem as seguintes perguntas: (i) houve similaridade nos desenhos macroeconômicos adotados por Argentina e Brasil ao longo dos vinte anos de existência do Mercosul? (ii) de que modo as crises cambiais vividas pelos dois países e as consequentes mudanças políticas ocorridas no interior de cada um alteraram seus modelos macroeconômicos? (iii) como, na ausência de um arcabouço cooperativo mais rígido, suas políticas macroeconômicas afetaram a evolução de seu comércio bilateral de mercadorias tomado, aqui, como Proxy para a integração regional? (iv) pode-se traçar uma relação positiva entre os principais planos econômicos adotados e as políticas comerciais mais ou menos protecionistas em relação ao vizinho? (v) quais são as formas mais plausíveis de coordenação de políticas macroeconômicas a serem adotadas por Argentina e Brasil? As respostas para essas perguntas são os principais objetivos específicos desse trabalho. / Mercosur has completed 20 years in 2011. Despite the advances seen at the beginning of the process, qualified by the strong intra-regional trade dynamic and by the custom union’s establishment, the optimism regarding to the regional bloc showed a downward trend over the years. The economic interdependent environment provided by the trade liberalization started to create unwanted effects and to demand increasing pro-integration impulses in order to accomplish the main objectives of Asuncion Treaty, which, in most cases, have not exceeded the rhetoric level. Among these undeveloped goals was the macroeconomic policy coordination, widely necessary to deepen the bloc’s trade and capable of preventing protectionists outbreaks so common among the participants, mainly between Argentina and Brazil, key-countries to the strengthening of Mercosur because of their political and economic influence. This lack of macroeconomic coordination, however, was characterized by phases of greater and lesser convergence between the two countries’ economic policies, which had results, respectively, more and less beneficial to the regional integration process. From this perspective, the aim of this paper is to define how the macroeconomic policies of Argentina and Brazil, along the outline that puts on one hand the neoliberal period (1991-2002) and on another a period when the state will play a bigger role (2003-2011), affected the regional integration, measured by their merchandise bilateral trade evolution. Therefore, the following questions arise: (i) was there any similarity in macroeconomic policies adopted by Argentina and Brazil during the twenty years of Mercosur? (ii) how do the exchange crises experienced by both countries and the consequent political changes occurred within each one altered their macroeconomic models? (iii) having in mind the absence of a more rigid cooperative framework, which ways their macroeconomic policies affect the evolution of their merchandise bilateral trade in? (iv) can we draw a positive relationship between the main economic plans of Argentina and Brazil and their more protectionist commercial policies regarding to their Mercour’s main neighbor? (v) what are the plausible macroeconomic policy coordination forms to be adopted by Argentina and Brazil? The answers to these questions are the main specific objectives of this paper.

This thesis is concerned with the development and use of a macroeconometric model for the Algerian economy between 1963 and 1984. The model was built because of a systematic lack of applied econometric studies pertaining to Algeria at both the macroeconomic and microeconomic level. It is hoped that the model will fill a gap in this area and will contribute to the much neglected field of applied econometric research with regard to Algeria. This lack of applied econometric studies for Algeria meant that the modelling exercise described here has had to rely on an extensive specification search based on evidence relating to Algeria's economic structure and policy, economic theory, and the experience of Less Developed Countries in the area of macroeconomic model-building. The lack of data was a major constraint in this area and part of this study consisted of collecting and compiling a large database. After the country's independence in 1962, Algerian macroeconomic policy aimed to create a strong industrial system and to satisfy the population's basic needs. It relied on heavy industrialisation to modernise the economy, oil revenues to finance development, and central planning as the major tool of macroeconomic regulation. The accumulation rate was high and the growth record was generally good. However high unemployment and inflation, considerable disequilibrium, low productivity, a vulnerable balance of payments and unsustainable external debt are the major macroeconomic problems that policy-makers have had to face. The model's equations were first estimated using the OLS method and were subjected to stringent statistical tests. The degree of test significance and parameter correspondence to a priori views on the economy was good. when the model was constructed, it was estimated using a 2SLS principal component method. The OLD results were found to be reasonably feasible. The equations were collected into a system of 63 equations and solved using dynamic simulation technique. The model was solved successfully and its tracking of historical data was reasonably good. Further tests were carried out to study its dynamic features. Having constructed the model, it was then used extensively to perform simulation analysis. The experiments ranged from those concerning the goverment's current expenditure to its monetary policy. In all, nine simulation exercises were carried out. These were revealing on the workings of the Algerian economy. The model was further used in scenario analysis. First the model was used to develop an ex ante forecast employing a linear trend model for the exogenous variables. The forecast database was used to generate multipliers. The policy analysis was constructed to coincide with the implementation of the Second Five Year Plan (1985-1989). The feasibility of the plan was examined by varying the price of oil according to three hypotheses. The aim of this test was to develop a realistic framework for applied macroeconomic analysis. / Algerian Ministry of Higher Education

Since the transition from the gold standard to the fiat monetary regime in the 1970s, both international and national financial markets have undergone substantial changes. Consequently, the role of money and finance has become a central catalyst for the development of the real economy. This dissertation addresses four key macroeconomic challenges faced by Japan and Europe from a monetary and financial perspective. Chapter 2 deals with the role of Japan's persistent low-, zero- and negative-interest rate environment on commercial banks and the real economy. The development of the Japanese economy since the early 1990s has been shaped by the bursting of the Japanese bubble economy. Since then, the Bank of Japan has not only lowered the policy interest rate to unprecedented levels, but also implemented a series of unconventional monetary policy measures. Nevertheless, the long-term stagnation of the Japanese economy continued, with the Japanese commercial banks being under consolidation pressure. Chapter 2 examines how Japan’s persistent monetary easing has affected the banking system and their consequences for the real economy. Chapter 3 focuses on Japan's decades-long struggle with low consumer price inflation. Despite the concerted efforts of monetary and fiscal expansions over more than three decades, the Japanese policymakers failed to produce consumer price inflation. Within Japanese policy and academic circles, skepticism has grown regarding Milton Friedman’s quantity theory on the money-price relationship. This skepticism led to the widespread belief that Japan's low inflation is not a monetary phenomenon, but a real economic phenomenon driven by structural problems, inter alia a rapidly aging society. Chapter 3 reveals the limitations of Friedman’s quantity theory of money from the viewpoint of the (original) quantity theory of money pioneered by Irving Fisher. Based on Fisher’s quantity theory of money, Chapter 3 shows that Japan’s prolonged low inflation is indeed a monetary phenomenon. Chapter 4 addresses the development of intra-euro area current account imbalances. Historically, there has been a clear disparity in policy stances between northern and southern European countries. In particular, the uncoordinated fiscal policies within the euro area have played a central role for the development of international capital flows, which in turn influenced the current account dynamics within the euro area. Chapter 4 provides insights into the role of the common monetary policy and uncoordinated fiscal policies for the development of intra-euro area current account imbalances. Chapter 5 turns attention to Germany’s persistent large current account surpluses which have been a frequent source of political conflicts in Europe and beyond. This chapter examines the causal relationship between the current account and financial account. To be specific, the impact of domestic capital outflows and foreign capital inflows on Germany’s current account surpluses. Evidence obtained from the Toda-Yamamoto causality model suggests that, for Germany, the causality runs from international capital flows (the financial account) to international real resource flows (the current account), and not vice versa. In summary, this dissertation aims to analyze the interplay between macroeconomic policymaking and real economic phenomena from a monetary and financial perspective. It demonstrates that the monetary and financial developments driven by monetary and fiscal policies play a pivotal role for the real economic development. By focusing on Japan and Europe, this dissertation illuminates the underlying causes of several macroeconomic challenges from a financial and monetary viewpoint, offering valuable insights for policymakers, academics and practitioners.:Table of Contents Chapter 1 5 Introduction 5 Chapter 2 7 The Japanese Banks in the Lasting Low-, Zero- and Negative-Interest Rate Environment 7 1. Introduction 7 2. The Origin and the Macroeconomic Environment of the Persistent Banking Crisis 8 2.1. The Japanese Bubble Economy 8 2.2. Macroeconomic Responses to the Lasting Crisis 9 2.3. Credit Guarantees and Public Credit 10 3. Development of the Japanese Banking Sector in the Persistent Crisis 11 3.1. Credit Crunch and Increasing Deposits 11 3.2. Interest Margins 12 3.3. Net Interest Income 14 4. Adjustment to Declining Net Interest Incomes 15 4.1. New Business Models, Increasing Fees and Commissions 15 4.2. Cost Reductions 17 4.3. Mergers 17 5. Outlook 18 Chapter 3 22 Japan’s Low Inflation from a Quantity Theory Perspective 22 1. Introduction 22 2. The Quantity of Money in Japan 23 2.1. Definition of Money 23 2.2. Money Creation and Banking Sector 26 2.3. Money Creation and Nonbanking Sector 28 3. Two Versions of the Quantity Theory of Money 30 3.1. From the Transactions Version to the Income Version 30 3.2. Problems with the Income Version 32 3.3. The Quantity Theory of Money and the Japanese Economy 33 4. Transactions Version of the Quantity Theory of Money and Japan’s Low Inflation 36 4.1. The Quantity of Money and the General Price Level in Japan 36 4.2. Japan’s Low Money Growth from Private and Government Debt Perspective 39 4.3. Japan’s Low Money Growth and Inflation from Macroeconomic Policy Perspective 41 5. Outlook for Japan’s Inflation from a Quantity Theory Perspective 44 Chapter 4 55 Macroeconomic Policy Making and Current Account Imbalances in the Euro Area 55 1. Introduction 55 2. Pre-Crisis Divergence of Fiscal Policies and Current Account Imbalances 56 2.1. German Reforms as an Asymmetric Shock for the Euro Area 58 2.2. Current Account Deficits in the Southern Euro Area and Beyond 61 3. Crisis, Emergency Credit and Fiscal Rescue Packages 64 3.1. Monetary Rescue Measures 64 3.2. Fiscal Rescue Funds 68 4. Post-crisis Macroeconomic Policy Mix 70 4.1. Fiscal and Monetary Policy Mix 70 4.2. ECB Unconventional Monetary Policy 72 5. Post-crisis Macroeconomic Policy Mix 76 Chapter 5 82 The Relationship between the German Current Account and Financial Account: Evidence from Toda-Yamamoto Causality Approach 82 1. Introduction 82 2. The Relationship between the Current Account and Financial Account 83 2.1. Recording of Balance-of-Payments Transactions 83 2.2. Standard Approaches to the Current Account Determination 84 2.3. Gross Capital Flow Approach 86 3. Empirical Analysis 87 3.1. Data Description and Estimation Procedure 87 3.2. Model Description and Results of Unit Root and Cointegration Tests 89 3.3. Results of Toda-Yamamoto Test for Multivariate Granger Causality 92 4. The German Current Account Surplus from a Gross Capital Flow Perspective 94 4.1. Bonanzas of Foreign Capital Inflows and Current Account Deficits in the 1990s 94 4.2. Surges of German Capital Outflows, Stops of Foreign Capital Inflows and Current Account Surpluses in the early 2000s 97 4.3. Gross Capital Flows and Persistent Current Account Surpluses from the late 2000s 100 5. Outlook 106