Abstracts Economics

Four essays on international economics and macroeconomics

by Jian Xu

The four essays which comprise this dissertation consider various issues in international finance and macroeconomics. All the issues have arisen from real phenomenon. Issues centered upon the transition from a fixed exchange rate regime to a floating exchange rate regime include: (1) dual exchange rate system with fraudulent behavior, (2) speculative attack and balance-of payment crisis and (3) the relationship between foreign trade tariff economic and productivity growth. These topics have been widely discussed, but so far, some of them are relatively understudied. Three models are established to examine the above issues and their implications. Dynamics and uncertainty entered the analysis in these models, and the models are solved by using dynamic and stochastic control techniques. (4) Empirical research presented here makes an advance in examining the transition from a fixed to a floating regime, which is characterized by recurrent devaluation and "discrete" jumps in exchange rate rather than the smooth transition in most of the developed counties. We investigate structure change in conjunction with the regime switch through the channel of capital reallocation across countries.In the first article "Dynamic Analysis on Speculative Attack, When and How?" the issue of Balance-of payment crisis is revisited in an intertemporal optimization setting. A three-stage model is built in this paper. A fixed exchange rate regime is maintained during the "normal time" until the crisis occurs, then the exchange rate is allowed to float in order to release the pressure of demand on the international reserve. The model implies that an adoption of a floating exchange rate regime might not be able to release the pressure on the crisis permanently.The second article, "The Dual Exchange Rate System with Fraudulent Leakage and its unification," develops a multi-variable dynamic system to describe the effect of inter market leakage. By applying the consumer optimization framework, I illustrated that under exogenous disturbances, illegal leakage plays the role in helping to stabilize the usually unstable system.The third paper "Speculative Attack and Balance of Payment Crises in Dual Exchange Rate Regimes" turns to an empirical study to examine speculative attack and balance of payment crisis in developing economy with dual exchange rate regimes. We show that the degree of currency convertibility on the parallel market generates significant effects on floating exchange rate, the prospective re-fixed exchange rate and on the probability of devaluation. We examined and confirmed that exchange rate and fundamental economic variables will be cointegrated.The forth paper investigates the cause of the ambiguity of the relationship between trade policy and productivity and economic growth. Through the use of static and dynamic analysis, the model shows that there are two conflict effects – the pro-protection effect and the pro-competitive effect – which generates the vagueness. (Abstract shortened by UMI.)