Monopolistic competition, trading externality, and the multiplier

Article Abstract:

An evaluation of the New Keynesian macroeconomic models show that transaction externalities and monopolistic competition are the two key features which give rise to a multiplier. Further testing of the two factors in the New Keynesian model show that the effects of the two factor offset each other and that transaction externality is weak in effecting a multiplier while monopoly power is positive in its effect on a multiplier. Transaction externalities effect a multiplier by inducing positive co-movement of aggregate output and real wages.

Economics, Research and Development in the Social Sciences and Humanities, Models, Monopolies, Macroeconomics, Keynesian economics

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Stock markets and the exchange rate: a multi-country approach

Article Abstract:

An exchange rate equation is derived from an intertemporal model of asset choice optimization and applied to the German mark-US dollar and Japanese yen-US dollar markets. Unlike previous specifications, the model includes equities aside from money and government bonds. Equities are a strong determinant of the exchange rate, whereas money and government bonds have little impact. The results do not support the portfolio balance model.

Economic aspects, Prices and rates, International aspects, Stock-exchange, Stock exchanges, Securities, Foreign exchange, Foreign exchange rates, Yen (Japan), Mark (Germany)

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