No description available.

The rst chapter co-authored with Tatiana Damjanovic studies optimal mon- etary policy in a New Keynesian model at the zero bound interest rate where households use cash alongside house equity borrowing to conduct transactions. The amount of borrowing is limited by a collateral constraint. When either the loan to value ratio declines or house prices fall, we observe a decrease in the money multiplier. We argue that the central bank should respond to the fall in the money multiplier and therefore to the reduction in house prices or the loan to collateral value ratio. We also nd that optimal monetary policy generates a large and per- sistent fall in the money multiplier in response to the drop in the loan to collateral value ratio. The second chapter is focused on a macroeconomic model with sticky prices, rms borrowing market and the labour market frictions. We study connection be- tween monetary policy and labour market under the negative nancial and the positive productivity shocks. We have found that the interest rate rule with in a- tion and labour market targeting performs better than the rules with the aggregate consumption and debt targeting and is closest to the optimal policy as compared to the other regimes in terms of the welfare measure. We demonstrate too that the sign of the coe¢ cient next to unemployment in the policy rule depends on the value of workers bargaining power. The third chapter co-authored with Tatiana Damjanovic and Keqing Liu uses the classical cobweb model framework to investigate properties of the transition matrix in the bounded memory econometric OLS-type learning. We de ne memory length as the number of past observations used to form a forecast and analytically prove that for any length, the eigenvalues of the transition matrix lie within the unit circle. In addition, we sketch the proof of stationarity of the cobweb model under bounded memory learning. Furthermore, we investigate the relationship between the volatility of forecasts and the length of memory and nd that shorter memory causes higher variance in both forecasts and estimates of the OLS parameters.

Not available / text

published_or_final_version / Economics and Finance / Doctoral / Doctor of Philosophy

Chan Chung Yan. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2004. / Includes bibliographical references (leaves 57-59). / Abstracts in English and Chinese. / Abstract --- p.i / Acknowledgement --- p.iv / Table of Contents --- p.v / List of Figures --- p.vi / Chapter 1. --- Introduction --- p.1 / Chapter 2. --- An Illustration with a Small Open Economy Model / Chapter 2.1 --- Review of Obstfeld (1990) --- p.4 / Chapter 2.2 --- A Model with Socially-Determined Time Preference --- p.6 / Chapter 3. --- Small Open Economy Models with Socially-Determined Time Preference --- p.15 / Chapter 3.1 --- The Laursen-Metzler Effect --- p.16 / Chapter 3.2 --- Exchange-Rate Dynamics --- p.21 / Chapter 3.3 --- Capital Mobility and Devaluation --- p.28 / Chapter 4. --- Dynamics of a Small Open Economy Model with Non-Flat Bond Curves --- p.35 / Chapter 4.1 --- Downward-Sloping Bond Curve --- p.38 / Chapter 4.2 --- Upward-Sloping Bond Curve --- p.38 / Chapter 5. --- Investment and Saving in a Small Open Economy Model with Capital Accumulation / Chapter 5.1 --- The Model --- p.41 / Chapter 5.2 --- Productivity Shocks --- p.46 / Chapter 6. --- Saddle-Path Stability of a Closed Economy Growth Model --- p.49 / Chapter 7. --- Conclusion --- p.54 / References --- p.57 / Appendix --- p.60

Computable General Equilibrium (CGE) models are among the most influential tools in applied economics. In the past few years, however, some serious questions have been raised about the validity of these models. The core of the critique is that the parameter selection criteria and the functional forms used are at odds with contemporary standards of practice in econometrics. After surveying the relevant literature, which I refer to as the 'econometric critique', a formal summary of the case against standard CGE modeling is presented, as is an alternative econometric-based modeling strategy which answers the critique. I then work through a comparative CGE modeling experiment designed to assess the contrasting methods. It is found that the parameter selection rule influences model predictions in individual sectors, but industry- and economy-wide aggregates do not appear to be much affected by reparameterizing a CGE model according to econometric criteria. By contrast, the choice of functional forms affects not only industry-specific results, but aggregate results as well, even for small policy shocks. However flexible functional forms are difficult to implement in CGE models because global monotonicity must be maintained. In the second and third chapters, I adapt one of the models to analyze the effects of carbon taxes in Canada. I review an approach called 'double dividend' taxation, in which the revenues from carbon taxes are used to reduce the rates of other distortionary taxes, so an overall efficiency gain can potentially be realized whether or not the reduction in pollution improves welfare. This eliminates the need to measure benefits, and in an international context, would obviate the free-rider problem. I demonstrate the existence of a double dividend strategy for carbon taxation in Canada in the short run. In chapter three, however, a long run extension of the model shows that the double dividend does not persist over time. Nevertheless, choosing an efficient revenue-recycling option can significantly reduce the implementation cost of the carbon tax.

Computable General Equilibrium (CGE) models are among the most influential tools in applied economics. In the past few years, however, some serious questions have been raised about the validity of these models. The core of the critique is that the parameter selection criteria and the functional forms used are at odds with contemporary standards of practice in econometrics. After surveying the relevant literature, which I refer to as the 'econometric critique', a formal summary of the case against standard CGE modeling is presented, as is an alternative econometric-based modeling strategy which answers the critique. I then work through a comparative CGE modeling experiment designed to assess the contrasting methods. It is found that the parameter selection rule influences model predictions in individual sectors, but industry- and economy-wide aggregates do not appear to be much affected by reparameterizing a CGE model according to econometric criteria. By contrast, the choice of functional forms affects not only industry-specific results, but aggregate results as well, even for small policy shocks. However flexible functional forms are difficult to implement in CGE models because global monotonicity must be maintained. In the second and third chapters, I adapt one of the models to analyze the effects of carbon taxes in Canada. I review an approach called 'double dividend' taxation, in which the revenues from carbon taxes are used to reduce the rates of other distortionary taxes, so an overall efficiency gain can potentially be realized whether or not the reduction in pollution improves welfare. This eliminates the need to measure benefits, and in an international context, would obviate the free-rider problem. I demonstrate the existence of a double dividend strategy for carbon taxation in Canada in the short run. In chapter three, however, a long run extension of the model shows that the double dividend does not persist over time. Nevertheless, choosing an efficient revenue-recycling option can significantly reduce the implementation cost of the carbon tax. / Arts, Faculty of / Vancouver School of Economics / Graduate

Wong, Ching Chuen. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2009. / Includes bibliographical references (leaves 45-46). / Abstract also in Chinese. / Spatial Competition in Two-Dimensional Product Space --- p.1 / Chapter 1.1 --- Introduction --- p.1 / Chapter 1.2 --- First model: Ordinal characteristics --- p.5 / Chapter 1.3 --- Second model: Categorical characteristics --- p.14 / Chapter 1.4 --- Conclusion --- p.18 / Spatial Competition with Demand Uncertainty --- p.21 / Chapter 2.1 --- Introduction --- p.21 / Chapter 2.2 --- Model --- p.26 / Chapter 2.3 --- Revelation of market density before transportation --- p.29 / Chapter 2.4 --- Revelation of market density after transportation --- p.36 / Chapter 2.5 --- Perfectly informed consumers --- p.38 / Chapter 2.6 --- Application: Negative externality --- p.40 / Chapter 2.7 --- Conclusion --- p.42 / References --- p.45

Sun, Wu. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2008. / Includes bibliographical references (leaves 43-45). / Abstracts in English and Chinese. / Abstract --- p.I / 摘要 --- p.II / Acknowledgments --- p.III / Chapter Essay 1. --- The Effect of Impatience on Determinacy --- p.1 / Chapter 1.1 --- Introduction --- p.1 / Chapter 1.2 --- The model --- p.2 / Chapter 1.3 --- Conclusion --- p.8 / Chapter Essay 2. --- Determinacy under Non-separable Utility --- p.9 / Chapter 2.1 --- Introduction --- p.9 / Chapter 2.2 --- The basic model --- p.10 / Chapter 2.3 --- Conclusion --- p.21 / Chapter Essay 3. --- Determinacy under Calvo-Style Sticky Price Model --- p.23 / Chapter 3.1 --- Introduction --- p.23 / Chapter 3.2 --- The model --- p.24 / Chapter 3.2.1 --- With staggered price only --- p.24 / Chapter 3.2.2 --- Incorporating firm-specific capital --- p.30 / Chapter 3.2.3 --- Incorporating staggered wages --- p.35 / Chapter 3.3 --- Conclusion --- p.41 / Reference --- p.43 / Appendix --- p.46 / Table 1: Baseline Calibration --- p.46 / Table 2: Baseline Calibration --- p.46

In explaining why service prices differ across countries (both developed and developing countries), most studies have paid attention to the role of structural variables such as population, trade balance, resource abundance etc., by using a full employment assumption. Due to the existence of high urban unemployment in developing countries, the assumption of full employment is not suitable. The objective of this study is to build general equilibrium models that can be used to explain the service price differences across developing countries by incorporating rural-urban migration and urban unemployment. Internal migration from rural to urban areas is allowed because of distortions in labor market. The current work includes structural variables that are used in the literature, such as agricultural land, mineral resources, labor endowment, trade deficit, population, and tourism, along with 2 new variables, manufacturing capital and services capital. This study also considers the effects of macroeconomic policies (fiscal and monetary policies) on service prices which are neglected in the literature. The theoretical models suggest that, ceteris paribus, larger land area, mineral resources, higher trade deficits, tourist receipts, and money supply increase service prices, but larger populations reduce service prices. The effects of services capital, labor force, the terms of trade, and government spending are ambiguous from the theoretical models. An empirical study is performed to test the theoretical implications. The empirical results suggest that larger endowments of land, mineral resources, manufacturing capital, labor force, and services capital, as well as higher trade deficits, tourist receipts, government spending, and money supply increase the service prices. Conversely, larger populations reduce service prices as predicted. / Graduation date: 1993