Stability of business cycles and economic openness of monetary union

Nakao, Masato

doi:10.1007/s40844-019-00124-6

Cited by 2 publications

(2 citation statements)

References 13 publications

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“…Nakao ( 2017 ) argued that an increase in capital mobility between countries in a capital markets union is a destabilizing factor, whereas an increase in fiscal transfers between such countries is a stabilizing factor, using Keynesian and Kaldorian two-country models. Nakao ( 2019 ) proved that a high degree of economic openness can adjust a shock in the monetary union regardless of whether the shock is asymmetric, using Keynesian and Kaldorian two-country models with a monetary union system.…”

Section: Formulation Of the Model On Government Bond Purchasementioning

confidence: 99%

Purchase of government bonds by a supranational central bank: its impact on business cycles

Nakao

Asada

2021

Evolut Inst Econ Rev

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The euro area emerged from the euro crisis without meeting the conditions presented by the theory of optimum currency area. The decisive policy that ended this crisis was the Outright Monetary Transactions policy. Besides, the quantitative easing policy supports the economy of the euro area after this crisis. To examine the impact of these supranational monetary policies on the business cycles in the euro area, which is not covered by optimum currency area theory, we use a Kaldorian two-country model featuring a monetary union and imperfect capital mobility. We find that an increase in government bond purchases is a stabilizing factor, whereas an extreme increase in the degree of counter-cyclical fiscal policy is a destabilizing factor. Nevertheless, as long as the fiscal and monetary policies of two countries are not extremely active, but active to a certain extent, the equilibrium point becomes locally stable. Furthermore, even if the business cycles are not synchronized, the purchase of government bonds of a particular country is effective in stabilizing the business cycles of both countries. From these results, we suggest that the euro area satisfies the metacriteria of an optimum currency area through the implementation of a government bond purchase system by a supranational central bank system.

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Section: Formulation Of the Model On Government Bond Purchasementioning

confidence: 99%

Purchase of government bonds by a supranational central bank: its impact on business cycles

Nakao

Asada

2021

Evolut Inst Econ Rev

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“…In addition a group of researchers, including the authors of the present paper, developed a series of Keynesian disequilibrium international macrodynamic models that are international extensions of Kaldor's nonlinear business cycle model [23]. See, for example, Asada [1], [2], Asada, Douskos, Kalantonis and Markellos [7], Asada, Douskos and Markellos [8], Asada, Inaba and Misawa [9], [10], Asada, Kalantonis, Markellos and Markellos [11], Asada, Misawa and Inaba [12], Maličký and Zimka [32], [33], Medveďová [34] and Nakao [37]. However, all of the above macrodynamic models are models of small open economies, or two-country models, with fixed or flexible exchange rates.…”

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confidence: 99%

A three-country Kaldorian business cycle model with fixed exchange rates: A continuous time analysis

Zimka¹,

Demetrian²,

Asada³

et al. 2021

DCDS-B

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This paper analyses a three-country, fixed exchange rates Kaldorian nonlinear macroeconomic model of business cycles. The countries are connected through international trade, and international capital movement with imperfect capital mobility. Our model is a continuous time version of the discrete time three-country Kaldorian model of Inaba and Asada [22]. Their paper provided numerical studies of the dynamics of the three countries under fixed exchange rates. This paper provides analytical examinations of the local stability of the model´s equilibria, and of the existence of business cycles. The results are illustrated by numerical simulations.

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Stability of business cycles and economic openness of monetary union

Cited by 2 publications

References 13 publications

Purchase of government bonds by a supranational central bank: its impact on business cycles

Purchase of government bonds by a supranational central bank: its impact on business cycles

A three-country Kaldorian business cycle model with fixed exchange rates: A continuous time analysis

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