1987 Fiscal Year Final Research Report Summary
Trade Surpluses, the Exchange Rate, and Open Macroeconomic Policies Including the Expansion of Domestic Demand -- Theory and Empirical Studies
| Project/Area Number |
61301073
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| Research Category |
Grant-in-Aid for Co-operative Research (A)
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| Allocation Type | Single-year Grants |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | The Yokohama National University |
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Principal Investigator |
ONITSUKA Yusuke Faculty of Economics, Yokohama National University, Professor, 経済学部, 教授 (00028052)
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| Co-Investigator(Kenkyū-buntansha) |
HIRAYAMA Kenjiro Department of Commerce, Kansai University, Associate Professor, 商学部, 助教授 (70165207)
KUDOH Kazuhisa Institute of Social Science, University of Tsukuba, Associate Professor, 社会科学系, 助教授 (00083329)
AKIYAMA Taro Faculty of Economics, Yokohama National University, Associate Professor, 経済学部, 助教授 (40167854)
KANOH Satoru Faculty of Economics, Yokohama National University, Associate Professor, 経済学部, 助教授 (50114971)
YAMAMOTO Taku Faculty of Economics, Yokohama National University, Proffesor, 経済学部, 教授 (50104716)
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| Project Period (FY) |
1986 – 1987
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| Keywords | Macroeconometric Model / Balance-of-Payments Imbalances / The Exchange Rate / Capital Mobility / Speculative Bubbles / Expectations Formation / Open Macroeconomic Policy / 解放マクロ政策 |
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| Research Abstract |
Our 2-year project had two main aims. One was to study the fundamental mechanisms of open macroeconomic issues such as the causes of trade imbalances, the effects of capital mobility, and the observed volatility of the exchange rate movements and prescribe proper policies which best stabilize the economy. The other aim was to construct a macroeconometric model so as to capture the actual impacts of these policies. In order to attain these aims, we had a number of meetings and heated discussions in the past two years.
Our macroeconometric model was so constructed as to be compact in size and yet it fits the actual behavior of the economy appropriately. This parsimonious principle led us to build, first, the CORE model which consists of about 30 equations, and to add a block of equations when a specific sector of the economy is of particular interest. Each sector is connected only through the CORE model. This turned out to work efficiently in the senses that the performances of the model showed no less satisfactory results of policy simulations than those of the standard large-scale econometric models and that the small-scale model allows for rather sophisticated econometric techniques that are sometimes essential from the requirement by the economic theory.
As for the individual research, most menbers shared the interests in the dominant roles played by the expectations formation in the foreign exchange markets.Sometimes, self-fulfilling expectations generate speculative bubbles and they may in turn generate huge capital flows and the balance-of-payments imbalances. Unfortunately, however, this aspect was not fully incorporated into our macroeconometric model. This provides us incentives and needs to update and improve our macroeconometric model in the near future.
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