This thesis studies several issues in the field of macroeconomic and financial stability.
In Chapter 2, I argue that systemic bankruptcy of firms can
originate from coordination failure in an economy with investment
complementarities. I demonstrate that in such an economy, a very
small uncertainty about economic fundamentals can be magnified
through the uncertainty about the investment decisions of other
firms and can lead to coordination failure, which may be manifested
as systemic bankruptcy. Moreover, my model reveals that systemic
bankruptcy tends to arise when economic fundamentals are in the
middle range where coordination matters. High financial leverage of
firms greatly increases the severity of systemic bankruptcy.
Optimistic beliefs of firms and banks can alleviate coordination
failure, but can also increase the severity of systemic bankruptcy
once it happens.
Chapter 3 studies how coordination failure in a country's new
technology investment dampens a country's economic growth. I
establish a two-sector Overlapping Generation model where capital
goods are produced by two different technologies. The first is a
conventional technology with constant returns. The second is a new
technology exhibiting increasing returns to scale due to
technological externalities, about whose returns economic agents
have only incomplete information. My model reveals that coordination
failure in new technology investment can lead to slower economic growth.
More interestingly, the model
generates a positive correlation between economic growth and
volatility.
In Chapter 4, Frank Milne and I establish a dynamic currency attack
model in the presence of a large player. In an attack on a fixed
exchange rate regime with a gradually overvalued currency, both the
inability of speculators to synchronize their attack and their
incentive to time the collapse of the regime lead to the persistent
overvaluation of the currency. We find that the presence of a large
player can accelerate or delay the collapse of the regime, depending
on his incentives to preempt other speculators or to ``ride the
overvaluation." / Thesis (Ph.D, Economics) -- Queen's University, 2007-11-28 15:26:27.834
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:OKQ.1974/923 |
| Date | 29 November 2007 |
| Creators | Li, Mei |
| Contributors | Queen's University (Kingston, Ont.). Theses (Queen's University (Kingston, Ont.)) |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English, English |
| Detected Language | English |
| Type | Book |
| Format | 659520 bytes, application/pdf |
| Rights | This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner. |
| Relation | Canadian theses |
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