مدل ساختارگرایی از اقتصاد باز کوچک در کوتاه، متوسط و بلند مدت
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|27623||2007||28 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Macroeconomics, Volume 29, Issue 2, June 2007, Pages 227–254
Open-economy macroeconomics contains a monetary model in the Keynesian tradition that is deemed serviceable for analyzing the short run and a nonmonetary neoclassical model thought capable of handling the long run. But do the Keynesian and neoclassical models meet the challenges thrown out by the main events of the past few decades? We first indicate that the effects of these shocks on the open economy are not well captured by either the standard Keynesian model or the standard neoclassical theory. Next we provide a careful development of a nonmonetary model of the equilibrium path of the real exchange rate, share price level, as well as natural output, employment and interest that contains “trading frictions” of the customer-market type. We then examine its implications for these shocks not only over the medium run but over the short run and the long run as well.
In open-economy macroeconomics there is a monetary model in the Keynesian tradition that is deemed serviceable for analyzing the short run (Mundell, 1962, Mundell, 1963, Dornbusch, 1976 and Dornbusch, 1980) and there is a nonmonetary neoclassical theory thought capable of handling the long run (Blanchard and Fischer, 1989 and Faria and León-Ledesma, 2000).1 For years the weak point in this arsenal was agreed to be the medium run (Malinvaud, 1994 and Malinvaud, 1996). This run, which follows the short-run adjustment of production, hiring and training, advertising and other investment rates, is a period of adjustment for the various business assets, such as customers and trained employees as well as plant, during which nationals’ private wealth holdings and social entitlements are regarded as constant—a period we will think of as emerging in the second year following a shock and running for half a decade or so. By now, several dynamic nonmonetary models of a “structuralist” possessing such a medium run have emerged (Phelps, 1988a, Phelps, 1988b, Hoon and Phelps, 1992, Phelps, 1994 and Obstfeld and Rogoff, 2000). At present, though, the structuralist models tend to be seen as niche products offering no competition to the established short-run and long-run models. But do the Keynesian and neoclassical models meet the challenges thrown out by the main events of the past few decades? We suggest that the effects of these shocks on the open economy are not well portrayed by either the standard Keynesian model or by standard neoclassical theory. (We relegate to the appendix in the working paper, Hoon and Phelps (2005), the key equations underlying the Dornbusch–Mundell–Fleming model and the standard competitive neoclassical model that form the basis of our following discussion.) Consider the 1980s shock to Europe: an external jump in real interest rates. The Dornbusch–Mundell–Fleming model and its descendants, applied to fluctuating-exchange-rate economies such as the US, EU and Japan, predict that a rise in the overseas interest rate interacts with the home country’s supply of liquidity, or LM curve, to cause a release of liquidity fuelling an increase of output and employment; in the usual extension, employment would gradually be forced back to its fixed natural level. Neoclassical theory would depict interaction of the interest rate increase with the supply of labor, in particular, it would show that a higher external real interest rate leads to an increase in the current marginal utility of wealth and thus a drop in the demand for leisure and hence an increase in the work week and possibly an increase in labor force participation. In fact, European employment went into a huge decline in the 1980s and by 2000, nearly 20 years later, unemployment rates had hardly recovered at all except in those countries that caught the internet boom of the late 1990s or implemented economic reforms.2 Consider next the sort of shock experienced in the US and parts of northern Europe in the second half of the 1990s: the emerging prospect of new industries in the future creating increased needs for capital—as a macroeconomic approximation, an anticipated future shift in the productivity parameter (see Phelps and Zoega, 2001). The Dornbusch–Mundell–Fleming model could only represent such an event as an increase in the marginal efficiency of investment, thus a shift of the IS curve, but such a disturbance would appreciate the currency by so much as to leave little or no rise in domestic interest rates and consequent release of liquidity, thus little or no rise in gross domestic output and employment.3 Neoclassical theory would depict a decline in the current marginal utility of wealth and thus a jump in the demand for leisure, in parallel to a jump in consumer demand, and hence a decrease in the work week and possibly a decrease in labor force participation. In fact, from 1996 to 1999 or 2000, employment zoomed without rising inflation, the labor force clearly rose, and hours per employed person inched up, at least in the US and, it appears, in the other booming economies too. Finally, consider what may have been a major shock of the 1960s: the large Kennedy tax cut, mostly the reduction in income taxes, enacted in the US in 1964.4 The Keynesian models implied that such a tax cut, in causing a real exchange rate appreciation, might fail to expand output through a net stimulus to aggregate demand but it might still be expansionary by reducing the costs of imported intermediary goods. Neoclassical theory suggested an expansion through the tax cut’s impact on the supply and demand for labor. In fact, the US showed no significant real appreciation—there was at first a mild depreciation and subsequently a recovery of the exchange rate—and the labor force did not appear to rise more than might have resulted from the decline of the unemployment rate. The fact that the unemployment did decline over the decade suggests that other mechanisms or channels may have delivered the famed expansion; aggregate demand cannot be excluded (since there was no appreciation), but the decline of inflation at mid-decade speaks somewhat against heavy reliance on that channel. We think that this somewhat disappointing performance of the Keynesian and neoclassical approaches should impel a closer look by macroeconomists into the behavior of the relatively new structuralist models to which we have referred. And since this third kind of model is dynamic, or intertemporal, a careful development of such a model provides the opportunity to compare its implications not only over the medium run but for the short run and the long run as well. Here we will develop more fully than has been attempted so far the small open-economy version of the customer-market model, first introduced by Phelps and Winter (1970) and extended in a general-equilibrium way in several papers since then (Calvo and Phelps, 1983, Gottfries, 1991, Krugman, 1987 and Phelps, 1994). (In the appendix in Hoon and Phelps (2005), we show how the model can be modified to the case of a large open economy.) The result is a nonmonetary model of the equilibrium path of the real exchange rate, share price level as well as natural output, employment and interest based on trading frictions in the goods market.5 Our model also provides an explanation for the dollar’s weakening and decline in employment since early 2002 and predicts a subsequent recovery that is centered around the epochal event hanging over the present situation: the explosion over the next few decades of Medicare and Social Security outlays for the baby boom generation. In any surprise-free scenario, or equilibrium path, the expectation of this future fiscal burden causes the US current account to go into surplus until the period when the baby boomers are exercising their huge medical and pension claims, during which the current account jumps into deficit (see Phelps, 2004). The logic is that the nation will do outsized saving in the early years to make room for the huge bulge of Medicare and Old Age Survivor and Disability Insurance (OASDI) claims that lie ahead. The dollar must weaken enough to shift the current account balance from today’s deficit not just to a sustainable deficit level but to the needed surplus. In contrast, the Dornbusch–Mundell–Fleming model predicts that an anticipation of a future increase in government transfer payment leads to a current real exchange rate appreciation and a temporary recession. The aggregative neoclassical model with its assumption of zero trading costs lacks the richness to study the behavior of the real exchange rate. Our explanation of the recent dollar weakness also contrasts with that of Blanchard et al. (2005) who argue that the dollar’s weakness since 2002 is due to the current huge accumulated external liabilities of the US requiring the running of large trade surpluses to service the interest on debt. The paper is organized as follows. In Section 2, we present some heuristics. Then, in Section 3, we develop and study the properties of a model suitable for a short-run and medium-run analysis. For concreteness, we think of a medium run here as a period during which nationals’ holdings of net foreign assets are constant.6 (The justification is that wealth will not change by enough, and soon enough, to influence greatly the early responses of the jumpy variables and the growth or decline of the customer stock.) More precisely, as we will be examining the four shocks discussed above under the simplifying assumption that the small open economy in question is initially neither a net creditor nor net debtor, the level of nationals’ holdings of net foreign assets held constant in the short- and medium-run analysis is zero. We establish conditions under which a unique perfect foresight path exists in a 3 × 3 dynamic system with the stock of customers as a slow-moving variable. (The full 4 × 4 dynamic system that takes full account of the influence of changes in the holding of net foreign assets on the two jumpy variables of the system is treated in the appendix in Hoon and Phelps (2005).) We then move on to apply the model to analyze four economic shocks: an expectation of a future step-increase in the level of Harrod-neutral productivity parameter; an increase in the exogenously given world real rate of interest; a permanent balanced-budget cut in the wage income tax rate; and an expectation of a future wage income tax rate increase required to finance increased entitlement spending. Section 4 then turns to the long run, where the levels of net foreign assets held by nationals adjust fully. Some concluding remarks are contained in Section 5.
نتیجه گیری انگلیسی
We suggest that standard versions of Keynesian and neoclassical theories applied to the open economy have difficulty in explaining some of the main events of the past few decades and the recent dollar weakening and US employment decline. It is possible that the new open-economy macroeconomics (Obstfeld and Rogoff, 1995 and Lane, 2001) will have better explanatory power. Our approach in this paper, however, has been to develop a structuralist model that is based on different theoretical underpinnings to explain these major events. Although we retain some fairly standard assumptions—perfect international capital mobility, rational expectations, prominence of demands and a Q theory of investments—the propagation mechanism through which shocks work their effects is different from those found in Keynesian and neoclassical approaches. With trading frictions in the goods market ( Phelps and Winter, 1970 and Obstfeld and Rogoff, 2000), shifts in demand, such as shifts in consumer demand and shifts in government purchase of labor or the consumption good, affect employment through supply-side effects of the real interest rate, real exchange rate, and business asset prices. The path of the natural rate of unemployment is displaced as a result. The structuralist model is analytically more complex as the dimensionality of the problem increases with the addition of new state variables. Yet, we believe that the gain in economic insight from further development of the structuralist approach is huge. Notwithstanding the increased complexity of our analysis, we suggest that the essence of the model’s predictions of the responses to the major shocks of the past few decades can be conveyed intuitively. Consider the shock experienced in the US in the second half of the 1990s, which we liken to the sudden expectation of a future surge in productivity. In our theory, this anticipation causes a boom in the stock market, which drives up consumer demand and domestic interest rate. An incipient capital inflow leads to an appreciation of the real exchange rate and a worsening trade balance. Because domestic firms then face stiffer competition from foreign suppliers, they are induced to reduce their markups, and consequently expand output and employment. On top of this, the increased valuation of business assets means that profits from future customers are high so that each firm lowers its current price and increases supply. The resulting economic boom is non-inflationary. Our theory also suggests that fiscal shocks—in the form of tax changes and welfare entitlements—have first-order effects on the supply side. The Kennedy permanent income tax cut produced an expansion of employment without any real appreciation largely because the wage-incentive effect on workers’ behavior increased employment and hence output to match the increased consumption stimulated by the tax cut. The increase in the external real interest rate in the 1980s facing the European economies caused an outflow of capital and brought about a real exchange rate depreciation there. Being shielded from foreign competition, European firms raised their markups and cut back supplies, consequently contracting employment. Our model also bears on the present-day dollar weakness and the large US trade deficit. On its postulate of correct expectations the model predicts that if the pension and medical benefit overhang is far less resolved in the US than in Europe, the dollar must be extraordinarily weak vis à vis the euro in order to deliver the exports and choke off the imports required to generate the trade surpluses during the run-up to the future entitlement explosion in order to create a cushion of overseas assets with which to finance trade deficits during the surge of entitlement benefits. But if in contrast households are in expectational disequilibrium, failing to understand that tax increases lie ahead or cuts in benefits or both, the model suggests that the trade balance will continue in deficit—thanks to household spending inflated by false expectations and helped along by a dollar that will not weaken much more as long as households remain in disequilibrium. (Of course, the American housing boom is also fuelled by a monetary policy of keeping short-term interest rates well below their “neutral” levels, which has had the effect of keeping long rates below the neutral level too.) It is interesting that market participants operate on the contrary belief that a return to fiscal sanity will strengthen the dollar. In our model, to repeat, once expectations shift closer to reality, we will see markedly decreased consumption, thus an improved trade balance and a much weaker dollar. It may be added that the longer US policy makers wait to get back to reality the greater the correction will have to be. In denying the need for tax hikes or benefit cuts, the government is staving off a further decline of the dollar at the price of the greater decline later when people finally catch on.