This dissertation consists of two essays in international macroeconomics. The first essay shows that optimal fiscal and monetary policy is time consistent in a standard small open economy. Further, there exist many maturity structures of public debt capable of rendering the optimal policy time consistent. This result is in sharp contrast with that obtained in the context of closed-economy models. In the closed economy, the time consistency of optimal monetary and fiscal policy imposes severe restrictions on public debt in the form of a unique term structure of public debt that governments can leave to their successors at each point in time. The time consistent result is robust: optimal policy is time consistent when both real and nominal bonds have finite horizons. While in a closed economy, governments must have both nominal and real bonds, and have at least real bonds over an infinite horizon to render optimal policy time consistent. The second essay uses a dynamic stochastic general equilibrium model to theoretically rationalize the empirical finding that sudden stops have weaker effects on outputs when the small open economy is more open to trade. First, welfare costs of sudden stops are decreasing in trade openness. The reason is that when the economy is more open to trade, the economy will have less volatile capital, which leads to less volatile output. In terms of welfare, when the small open economy is more open to trade, the welfare costs of sudden stops will be smaller. Second, sudden stops may be welfare improving to the small open economy. This is because when the representative household is a net borrower in the international capital market, its consumption will be negatively correlated with country spread. Since utility is a concave function of consumption, it must be a convex function of country spread. That is, when the country spread is more volatile, the mean utility is higher. The two findings are robust: they hold with one sector economy model, and two sector economy models with homogenous capital and heterogenous capital. In addition, this paper shows that a counter-cyclical tariff rate policy is not welfare-improving. / Dissertation

<p>This dissertation presents a quantitative study on the relationship between financial intermediation and the macroeconomy of the United States. It consists of two major chapters, with the first chapter studying adverse shocks to interbank market lending, and with the second chapter studying a theoretical model where aggregate balance sheets of the financial and non-financial sectors play a key role in financial intermediation frictions.</p><p>In the first chapter, I empirically investigate a novel macroeconomic shock: the funding liquidity shock. Funding liquidity is defined as the ability of a (financial) institution to raise cash at short notice, with interbank market loans being a very common source of short-term external funding. Using the "TED spread" as a proxy of aggregate funding liquidity for the period from 1971M1 to 2009M9, I first discover that, by using the vector-autoregression approach, an unanticipated adverse TED shock brings significant recessionary effects: industrial production and prices fall, and the unemployment rate rises. The contraction lasts for about twenty months. I also recover the conventional monetary policy shock, the macro impact of which is in line with the results of Christiano et al (1998) and Christiano et al (2005) . I then follow the factor model approach and find that the excess returns of small-firm portfolios are more negatively impacted by an adverse funding liquidity shock. I also present evidence that this shock as a "risk factor" is priced in the cross-section of equity returns. Moreover, a proposed factor model which includes the structural funding liquidity and monetary policy shocks as factors is able to explain the cross-sectional returns of portfolios sorted on size and book-to-market ratio as well as the Fama and French (1993) three-factor model does. Lastly, I present empirical evidence that funding liquidity and market liquidity mutually affect each other.</p><p>I start the second chapter by showing that, in U.S. data, the balance sheet health of the financial sector, as measured by its equity capital and debt level, is a leading indicator of the balance sheet health of the nonfinancial sector. This fact, and the apparent role of the financial sector in the recent global financial crisis, motivate a general equilibrium macroeconomic model featuring the balance sheets of both sectors. I estimate and study a model within the "loanable funds" framework of Holmstrom and Tirole (1997), which introduces a double moral hazard problem in the financial intermediation process. I find that financial frictions modeled within this framework give rise to a shock transmission mechanism quantitatively different from the one that arises with the conventional modeling assumption, in New Keynesian business cycle models, of convex investment adjustment costs. Financial equity capital plays an important role in determining the depth and persistence of declines in output and investment due to negative shocks to the economy. Moreover, I find that shocks to the financial intermediation process cause persistent recessions, and that these shocks explain a significant portion of the variation in investment. The estimated model is also able to replicate some aspects of the cross-correlation structure of the balance sheet variables of the two sectors.</p> / Dissertation

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Thesis (Ph. D.)--University of Chicago, Dept of Economics, June 2001. / Includes bibliographical references. Also available on the Internet.

Thesis (Ph. D.)--University of Missouri-Columbia, 2003. / Typescript. Vita. Includes bibliographical references (leaves 109-112). Also available on the Internet.

Thesis (Ph. D.)--University of Missouri-Columbia, 2003. / Typescript. Vita. Includes bibliographical references (leaves 109-112). Also available on the Internet.

No description available.

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This study investigated whether changes occurred in consumer buying behavior within the retail clothing industry during difficult economic climates. The significance of the study was to determine whether the lack of disposable income and increasing inflation swayed consumers to pursue value for money clothing opposed to international branded products. The important factor was to establish whether the consumers shift in purchasing would be temporal or permanent. This research involved various research tools and designs which assisted in finding a feasible conclusion. Quantitative research was used with structured questionnaires being given to consumers. These findings were annotated accordingly in tables and diagrams with publications and literature to reiterate the findings and in turn enable this study to conclude that consumers buying patterns of clothing does change during difficult economic climates. The research was conducted in Durban with a sample of 133 respondents. Some salient findings emanating from this study included: consumer’s perceptions had influenced their behaviour, and preference as opposed to logical choice and need. Focus was concentrated on one of the most acknowledged value retailers in South Africa, Mr Price clothing. Seventy three percent of the respondents said that Mr Price offered value for money, seventy-six percent stated that they offered quality products. A further ninety six percent felt that Mr Price clothing offered choice of style. These percentages are undisputedly indicative that Mr Price clothing has obtained the winning formula especially in times when minimal disposable income and a clamp on the ease of getting or increasing credit options are scarce. The findings indicated that Mr Price was indeed the retailer of choice, with a staggering eighty eight percent stating that they would continue to frequent Mr Price clothing even after their finacial situation improved. Further testing also indicated that quality and price were the two crucial deciding factors that influenced consumers. This supports the fact that consumers are still looking for value for money. Perceptions and social status do influence the supply and demand theory when it involves clothing. A recommendation for further study would involve using different demographic market segments based on income, gender and race amongst others. Internet influence in clothing purchases would also be an influencing factor going forward along with the effect of advertising. / Thesis (MBA)-University of KwaZulu-Natal, Westville, 2009.