TRANSACTION COSTS, MULTIPLE EQUILIBRIA, AND THE MUNDELL PROPOSITION
Journal Title: Asian Economic and Financial Review - Year 2014, Vol 4, Issue 11
Abstract
This paper inserts Coase (1937) assertion into Mundell (1963) model. That is, investigating the robustness of Mundell (1963) proposition with the consideration of transaction costs in the labor market. The result shows that the existence of transaction costs makes the externalities of transaction costs in the labor market. Therefore, labor market appears to be multiple equilibria. If labor market appears as low-employment equilibrium, the Mundell proposition cannot work thoroughly under both fixed and flexible exchange rates. If labor market appears as high-employment equilibrium, the Mundell proposition is valid under fixed exchange rates but will be invalid under flexible exchange rates.
Authors and Affiliations
Hong-Yu Lin| Department of Business and Management, Ming Chi University of Technology, Taishan, Taiwan
Keywords
Related Articles
- EP ID EP2105
- DOI -
- Views 451
- Downloads 27
DOES TRADE WITH LABOUR SENDING COUNTRIES REDUCE DEMAND FOR MIGRANT WORKERS: A LESSON FROM MALAYSIA
This paper has three objectives. The first objective is to examine the long-run relationships among exports, imports, income and demand for migrant workers. This is followed by a causality test between these variables as...
CAUSALITY BETWEEN OIL CONSUMPTION AND ECONOMIC GROWTH IN OPEC COUNTRIES: A PANEL COINTEGRATION APPROACH
This paper examined the relationship between oil consumption and economic growth in OPEC countries within a panel cointegration and panel based error correction model by using data from 1980 – 2011. In this paper we use...
Short Term Relationships between European Electricity Markets
This paper investigates the short term relationship between the three major European electricity markets: France, Germany and Italy. Using a multivariate analysis, we study the impact of each electricity price changes in...
THRESHOLD EFFECTS IN THE RELATIONSHIPS OF REITS AND OTHER FINANCIAL SECURITIES IN DEVELOPED COUNTRIES
We use a Panel Smooth Transition Regression model (PSTR) to investigate the nonlinear dynamic relationship between financial variables and REITs of Japan and U.S with 3-month interest rate change as threshold variable....
IMPACT OF GOVERNMENT SPENDING ON PRIVATE CONSUMPTION USING ARDL APPROACH
This study investigates the impact of government spending on private consumption a case study of China. We used Autoregressive Distributed Lag (ARDL) approach to estimate the long and short run effects of the model using...