IDEAS home Printed from https://ideas.repec.org/h/eme/isetez/s1571-038620150000024021.html
   My bibliography  Save this book chapter

International Trade Imbalance: The Amplification of Monetary Policy Effects through Financial Markets

In: Monetary Policy in the Context of the Financial Crisis: New Challenges and Lessons

Author

Listed:
  • Qiheng Han
  • Junqing Li
  • Jianbo Zhang

Abstract

Based on an uncertainty model with an infinite horizon, this chapter analyzes how financial development and monetary policy in two countries can impact international trade and capital flows and influence individual behavior and welfare. Our study shows that differences in capital market development are the major contributing factors for trade imbalance and investment among countries. We also find that monetary policies are important factors affecting the trade balance, consumption, and investment. Countries with one-sided, pegging exchange rate policies tend to buy more bonds and enjoy larger trade surpluses. This effect is closely related to the level of capital market development: in these two countries, at higher stages of development, the effects of idiosyncratic monetary policy on imbalance are amplified.

Suggested Citation

  • Qiheng Han & Junqing Li & Jianbo Zhang, 2015. "International Trade Imbalance: The Amplification of Monetary Policy Effects through Financial Markets," International Symposia in Economic Theory and Econometrics, in: Monetary Policy in the Context of the Financial Crisis: New Challenges and Lessons, volume 24, pages 339-365, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-038620150000024021
    DOI: 10.1108/S1571-038620150000024021
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620150000024021/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620150000024021/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S1571-038620150000024021
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620150000024021/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://libkey.io/10.1108/S1571-038620150000024021?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    incomplete financial market; monetary policy combination; global imbalances; D52; F17; F34;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:isetez:s1571-038620150000024021. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.