Global growth, international trade patterns and national inflation policies with capital accumulation in a multi-country economy
Purpose - The purpose of this paper is to examine global monetary economic growth with free trade. It develops a multi-country monetary growth model with capital accumulation to provide some insights into complexity of economic globalization with free trade and financial markets. Design/methodology/approach - The real aspects of the model is based on the neoclassical growth theory and monetary aspects of the model are based on the money-in-utility approach. The behavior of households is based on an alternative approach. The paper shows that the dynamics of the Findings - This paper simulates equilibrium and motion of the global economy with three, developed, newly industrializing, and developing countries and Cobb-Douglas production functions. As the global monetary economic system is unstable, the perfectly competitive world economy may either experience unlimited growth or economic crisis. Because of the choice of the initial conditions and the parameters, the simulation demonstrates a situation of global economic declination. This paper also demonstrates, for instance, that the global economy worsens off as the developed economy reduces its propensity to save or increases its inflation policy. Social implications - This paper also tries to provide some possible implications of our model for the recent economic crisis. A policy implication of the results is that as global economies with free trade and financial markets are possibly structurally unstable and the global economy may suffer from economic declination, government interventions, and co-operation among countries are necessary for global sustainable development. Originality/value - The paper offers insights into the linkage between national monetary policies and global economic growth.
Volume (Year): 2 (2010)
Issue (Month): 1 (April)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/jfep.htm Email:
When requesting a correction, please mention this item's handle: RePEc:eme:jfeppp:v:2:y:2010:i:1:p:60-79. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.