| 1. |
- Gylfason, Thorvaldur, et al.
(författare)
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A Synthesis of Keynesian, Monetary, and Portfolio Approaches to Flexible Exchange Rates
- 1981
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The purpose of this paper is to extend our earlier systhesis of monetary and Keynesian approaches to balance-of-payments theory under fixed exchange rates to the analysis of flexible exchange rates. We start with an overview of partial Keynesian, monetary, and portfolio approaches to the determination of exchange rates. We first develop two version of a partial Keynesian model (Meade 1951, Mundell 1962, Fleming 1962) in which the exchange rate is determined at the level that equilibrates the overall balance of payments. We then present three versions of a monetary approach, one assnuming continuous purchasing power parity (Frenkel 1976, Bilson 1978a), and the others assuming either covered interest parity (Dornbusch 1976a) or real interest parity (Frankel 1979). Both versions of the partial monetary approach use domestic and foreign demand-for-money equations as their only other ingredients. Finally, we present a partial portfolio model (Branson 1979) in which the exchange rate and the domestic interest rate vary to achieve equilibrium in a financial portfolio consisting of domestic bonds, foreign bonds, and domestic money. The portfolio approach and the monetary approach are often described as asset market approaches to the exchange rate, because the exchange rate moves in the short run to ensure that existing stocks for assets are willingly held. In the monetary approach, the only assets are national monies, while in the portfolio approach the assets include money and bonds. The partial approaches presented in section I give very different predictions about, for example, the exchange-rate effects of changes in income and interest rates. As a result, strong contrasts have been drawn between them, especially between the Keynesian and monetary approaches. The purpose of this paper, like that of our earlier paper, is to show that most of these contrasts are potentially misleading, since the partial approaches can be best seen as different parts of a larger system. Within the larger system which we develop in section II, we show that the differing predictions of the partial models are based in aprt on ignoring other important parts of the system, and in part on particular assumptions about expectatins and about the strength and speed of the international linkages among national markets for goods and financial assets.
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| 2. |
- Gylfason, Thorvaldur, et al.
(författare)
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Comepting Wage Claims, Cost Inflation, and Capacity Utilization
- 1982
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper develops a theory of competing wage claims and cost inflation, and attempts to integrate this theory into the core of modern macroeconomic analysis. Specifically, the paper proposes an explanation for wage rigidity and wage interdependence based on an application of duopoly theory to labor union behavior into a macroeconomic general equilibrium model with goods, money, and bonds as well as two kinds of labor. Special emphasis is placed on the interplay between demand and cost factors in the inflation process and on the implications of wage competition among labor unions for the relationship between inflation and unemployment in the short and long run.
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| 3. |
- Gylfason, Thorvaldur
(författare)
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Credit Policy and Economic Activity in Developing Countries : An Evaluation of Stabilization Programs Supported by the IMF, 1977-79
- 1983
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper reviews the relationship between credit policy, balance of payments, and growth performance in developing countries within the framework of an evaluation of performance under stabilization programs supported by the IMF during 1977-79. The macroeconomic implicatoins of the supply and cost effects of credit policy are explored with the aid of a simple analytical model of the determination of output and the balance of payments. Based on nonparametric comparisons between performance under the stabilization programs reviewed and the experience of a reference group, the empirical evidence indicates that a significant improvementof relatively modest (and statistically insignificant) reduction in the rate of growth of output during and immediately after the program period.
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| 4. |
- Gylfason, Thorvaldur
(författare)
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Development and Growth in Resource-Dependent Countries : Why Social Policy Matters
- 2012
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Ingår i: Mineral Rents and the Financing of Social Policy. - London : Palgrave Macmillan. - 9780230370913 - 9781349350711 ; , s. 26-61
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Bokkapitel (refereegranskat)abstract
- Social development and economic growth are closely intertwined. Social indicators - such as life expectancy, fertility and literacy - convey a clear and consistent picture of rapid progress around the world in recent decades, and sometimes a more transparent picture than do more commonly used economic indicators. Since 1960, the people of China have seen their life expectancy increase by nine months per year; in India, by four to five months; in Ghana, by more than three months. The sources of greater prosperity and longer lives are gradually becoming better understood, especially the economic forces such as investment, education, trade and economic stability, to name but a few of the determinants of growth identified before the advent of modern growth theory by philosophers and economists from Adam Smith to Arthur Lewis and Robert Solow. Diversification away from excessive dependence on natural resources, including minerals, has been identified as a possible additional source of growth through assorted channels that is discussed next. The role of political and social forces in economic development is less well understood, however, so this is where we begin.
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| 5. |
- Gylfason, Thorvaldur, et al.
(författare)
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Does Devaluation Improve the Current Account?
- 1983
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper incorporates the link between devaluation, foreign interest payments, and the current acccount into a fairly general macroeconomic model in which exchange rate changes influence aggregate demand through exports, imports, and expenditures as well as aggregate supply via the cost of imported factors of production. On the basis of avaliable statistical estimates of the behavioral and structural parameters of the model, an attempt is mafe to assess the empirical importance of this link among others in a group of highly indebted industrial and developing countries. By and large, the empirical results indicate that high foreign debt and interest payments tend to reduce the short-to-medium-run effect of devaluation on national income, expecially in the LDCs, but make little difference to its generally positive effect on the current account.
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| 6. |
- Gylfason, Thorvaldur, et al.
(författare)
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Does Devaluation Make Sense in the Least Developed Countries?
- 1985
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The focus of this study is on the short-to-medium-term effects of devalution in the least developed countries where a large part of the population barely survives on a subsistence wage. A general macroeconomic framwork for devaluation analysis in LDCs is developed. Empirical evidence is presented to demonstrate that devaluation can be an efficient means of reducing current account deficits in the least developed countries, provided that it is accompanied by domestic monetary restraint as well as by an infusion of foreign concessional finance, to avert or at least reduce the detrimental side effects on living standards that would otherwise occur during the period of adjustment to the new exchange rate.
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| 7. |
- Gylfason, Thorvaldur
(författare)
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Endogenous Growth and Inflation
- 1991
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- A simple model of the simultaneous determination and interaction of inflation and economic growth is constructed by incorporating money into an optimal growth framework with constant returns to capital. Various channels through which increased inflation tends to reduce growth and declining growth tends to amplify inflation are discussed. Special attention is paid to the potential effects of inflation (a) on saving through real interest rates (or uncertainty), (b) on the income velocity of money, and (c) on the government budget deficit through the inflation tax and tax erosion. Numerical analysis of the model indicates that, although a wide variety of outcomes is possible, inflation and growth tend to be negatively correlated for reasonable values and constellations of the structural parameters of the model, and to vary inversely with one another in response to changes in individual parameters. In particular, budget deficits financed by monetary expansion tend to reduce growth in the long run through their interplay with inflation, saving behavior, portfolio choice, and taxes.
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| 8. |
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| 9. |
- Gylfason, Thorvaldur
(författare)
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Interest, Inflation and the Aggregate Consumption Function
- 1979
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper reports on an empirical study of the effects of interest rates and inflation on aggregate consumption in the United States. Empirical evidence, based on quarterly U.S. data from the postwar period, is first presented in support of the hypothesis that the real rate of interest varies inversely with the rate of inflation, at least in the short run. Regression estimates of an aggregate consumption function for the United States, also based on quarterly data from the postwar period, are then presented. These estimates indicate that the propensity to consume varies inversely with interest rates and directly with the rate of inflation.
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| 10. |
- Gylfason, Thorvaldur, et al.
(författare)
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Money, Exchange Rates, Wages, and Games
- 1987
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper is focused on the interaction of monetary policy and wage determination in open economies with strong labor unions. Applying some elements of game theory, the paper views both government and labor as endogenous utility maximizers, and studies the macroeconomic consequences af their interaction. In particular, the paper shows (a) how labor unions adjust wages optimally to prices following monetary expansion or devaluation; (b) how the ultimate effectiveness of policy is reduced (without necessarily being destroyed) by optimal union reactions; and (c) how the interplay of government and labor can create a persistent tendency to unemployment and inflation simultaneously.
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