IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01304325.html
   My bibliography  Save this paper

L'interdépendance des économies en change flexible : les apports d'une maquette dynamique

Author

Listed:
  • Eric Bleuze

Abstract

Iterdependence of economies under flexible exchange rates : the contributions of dynamic model This paper present a dynamic model in order to analyse interdependence between two identical countries under flexible exchange rates. The dynamic process is depending on slow adjustment of prices to their desired level (which is positively related to real interest rate) combined with the influence of current account on foreign exchange markets. On the short run, the exchange rate is determined by financial factors ; on the long run by current account. So the model gives a classical long term equilibrium reached on a keynesian trajectory. Following a disturbance, the new equilibrium is obtained slowly with complex trajectories, which are difficult to forecast. This leads us to be skeptic concerning the realism of the rational expectations hypothesis. Flexible exchange rates are unable to isolate each country from the schocks occurred in the other. More precisely, both countries suffer from a degradation of supply conditions in one of them. A demand expansion in one country provokes a temporary production rise, followed by a long depression especially in the initiating country, whose exchange rate is progressively depreciated.

Suggested Citation

  • Eric Bleuze, 1988. "L'interdépendance des économies en change flexible : les apports d'une maquette dynamique," Post-Print hal-01304325, HAL.
  • Handle: RePEc:hal:journl:hal-01304325
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-01304325
    as

    Download full text from publisher

    File URL: https://sciencespo.hal.science/hal-01304325/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Masson, Paul R., 1981. "Dynamic stability of portfolio balance models of the exchange rate," Journal of International Economics, Elsevier, vol. 11(4), pages 467-477, November.
    2. Jean-Paul Fitoussi & Edmund S. Phelps, 1987. "Politique économique aux Etats-Unis et croissance du chômage en Europe," Revue de l'OFCE, Programme National Persée, vol. 18(1), pages 123-147.
    3. Maurice Obstfeld, 1982. "Aggregate Spending and the Terms of Trade: Is There a Laursen-Metzler Effect?," The Quarterly Journal of Economics, Oxford University Press, vol. 97(2), pages 251-270.
    4. William H. Branson & Julio J. Rotemberg, 1991. "International Adjustment with Wage Rigidity," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 13-44, National Bureau of Economic Research, Inc.
    5. Mathieu Féroldi & Henri Sterdyniak, 1987. "La dynamique du taux de change : du long au court terme," Post-Print hal-03428757, HAL.
    6. Blanchard, Olivier Jean & Kahn, Charles M, 1980. "The Solution of Linear Difference Models under Rational Expectations," Econometrica, Econometric Society, vol. 48(5), pages 1305-1311, July.
    7. Wyplosz, Charles A., 1983. "The exchange and interest rate term structure under risk aversion and rational expectations," Journal of International Economics, Elsevier, vol. 14(1-2), pages 123-139, February.
    8. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
    9. repec:hal:spmain:info:hdl:2441/5951 is not listed on IDEAS
    10. Currie, David A, 1985. "Structural Instability in a Rational Expectations Model of a Small Open Economy with a J-Curve," Economica, London School of Economics and Political Science, vol. 52(205), pages 25-36, February.
    11. Blanchard, Olivier J, 1979. "Backward and Forward Solutions for Economies with Rational Expectations," American Economic Review, American Economic Association, vol. 69(2), pages 114-118, May.
    12. Dornbusch, Rudiger & Fischer, Stanley, 1980. "Exchange Rates and the Current Account," American Economic Review, American Economic Association, vol. 70(5), pages 960-971, December.
    13. Jorge Braga de Macedo & David M. Meerschwam, 1985. "Exchange Rate Flexibility and the Transmission of Business Cycles," NBER Working Papers 1573, National Bureau of Economic Research, Inc.
    14. Kouri, Pentti J K, 1976. " The Exchange Rate and the Balance of Payments in the Short Run and in the Long Run: A Monetary Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 78(2), pages 280-304.
    15. Jean-Paul Pollin & François Chevallier, 1985. "La transmission internationale des chocs monétaires en changes flexibles," Revue Économique, Programme National Persée, vol. 36(6), pages 1301-1344.
    16. Jeffrey Sachs, 1980. "Wages, Flexible Exchange Rates, and Macroeconomic Policy," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 731-747.
    17. F. Chevallier & Jean-Paul Pollin, 1985. "La transmission internationale des chocs monétaires en changes flexibles," Post-Print halshs-00287651, HAL.
    18. Driskill, Robert, 1981. "Exchange rate overshooting, the trade balance, and rational expectations," Journal of International Economics, Elsevier, vol. 11(3), pages 361-377, August.
    19. Argy, Victor & Salop, Joanne, 1983. "Price and Output Effects of Monetary and Fiscal Expansion in a Two-Country World under Flexible Exchange Rates," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 228-246, July.
    20. Svensson, Lars E O & Razin, Assaf, 1983. "The Terms of Trade and the Current Account: The Harberger-Laursen-Metzler Effect," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 97-125, February.
    21. Nicholas Sarantis, 1986. "The Mundell-Fleming Model with Perfect Capital Mobility and Oligopolistic Pricing," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 9(1), pages 138-148, September.
    22. Daniel, Betty C, 1981. "The International Transmission of Economic Disturbances under Flexible Exchange Rates," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(3), pages 491-509, October.
    23. William H. Branson, 1976. "The Dual Roles of the Government Budget and the Balance of Payments in the Movement from Short-Run to Long-Run Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 90(3), pages 345-367.
    24. Henderson, Dale W. & Rogoff, Kenneth, 1982. "Negative net foreign asset positions and stability in a world portfolio balance model," Journal of International Economics, Elsevier, vol. 13(1-2), pages 85-104, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jérôme Creel, 2001. "Faut-il contraindre la politique budgétaire en Union monétaire ?. Les enseignements d'une maquette simulée," Revue de l'OFCE, Presses de Sciences-Po, vol. 77(2), pages 199-249.
    2. Antoine Bouveret & Bruno Ducoudre, 2007. "On the Contingency of Equilibrium Exchange Rates with Time - Consistent Economic Policies," SciencePo Working papers Main hal-01066080, HAL.
    3. repec:hal:spmain:info:hdl:2441/2943 is not listed on IDEAS
    4. repec:hal:spmain:info:hdl:2441/2978 is not listed on IDEAS
    5. Franck Amalric & Henri Sterdyniak, 1989. "Interdépendance et coopération : les leçons d'une maquette," Revue de l'OFCE, Programme National Persée, vol. 26(1), pages 135-156.
    6. Fabrice Capoen & Jérôme Creel & Pascal Cussy & Hélène Lenoble-Liaud, 2000. "How to manage speculative shocks : intra-european vs. international monetary coordination," Working Papers hal-03458449, HAL.
    7. repec:hal:spmain:info:hdl:2441/5221 is not listed on IDEAS
    8. Bruno Ducoudre, 2008. "Structure par terme des taux d’intérêt et anticipations de la politique économique," Sciences Po publications info:hdl:2441/5221, Sciences Po.
    9. Antoine Bouveret, 2010. "Economic policies, long run equilibrium and exchange rate dynamics [Politiques économiques, dynamique et équilibre de long terme du taux de change]," SciencePo Working papers Main tel-04097866, HAL.
    10. repec:hal:spmain:info:hdl:2441/5262 is not listed on IDEAS
    11. repec:hal:spmain:info:hdl:2441/6125 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Henri Sterdyniak & Éric Bleuze, 1988. "L'interdépendance des économies en change flexible : les apports d'une maquette dynamique," Revue Économique, Programme National Persée, vol. 39(5), pages 999-1034.
    2. repec:hal:spmain:info:hdl:2441/5386 is not listed on IDEAS
    3. Agnès Bénassy & Henri Sterdyniak, 1992. "La détermination des taux de change dans les modèles multinationaux : l'état de l'art," Économie et Prévision, Programme National Persée, vol. 104(3), pages 39-71.
    4. Maggiori, Matteo, 2021. "International Macroeconomics With Imperfect Financial Markets," SocArXiv z8g6r, Center for Open Science.
    5. van de Klundert, Theo C N J & van der Ploeg, Frederick, 1987. "Wage Rigidity and Capital Mobility in an Optimizing Model of a Small Open Economy," CEPR Discussion Papers 168, C.E.P.R. Discussion Papers.
    6. Obstfeld, Maurice & Stockman, Alan C., 1985. "Exchange-rate dynamics," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 18, pages 917-977, Elsevier.
    7. Francesco Giavazzi & Charles Wyplosz, 1984. "The Real Exchange Rate, the Current Account, and the Speed of Adjustment," NBER Chapters, in: Exchange Rate Theory and Practice, pages 335-356, National Bureau of Economic Research, Inc.
    8. Frenkel, Jacob A. & Mussa, Michael L., 1985. "Asset markets, exchange rates and the balance of payments," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 14, pages 679-747, Elsevier.
    9. Davis, George K. & Miller, Norman C., 1996. "Exchange rate mean reversion from real shocks within an intertemporal equilibrium model," Journal of International Money and Finance, Elsevier, vol. 15(6), pages 947-967, December.
    10. Gylfason, Thorvaldur & Helliwell, John F, 1983. "A Synthesis of Keynesian, Monetary, and Portfolio Approaches to Flexible Exchange Rates," Economic Journal, Royal Economic Society, vol. 93(372), pages 820-831, December.
    11. William H. Branson & Willem H. Buiter, 1982. "Monetary and Fiscal Policy with Flexible Exchange Rates," NBER Working Papers 0901, National Bureau of Economic Research, Inc.
    12. Suman S. Basu & Atish R. Ghosh & Jonathan D. Ostry & Pablo E. Winant, 2018. "Managing Capital Outflows with Limited Reserves," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(2), pages 333-374, June.
    13. Kazimierz Stanczak, 1992. "The Implications of Convex Arbitrage Costs for International Macroeconomics," UCLA Economics Working Papers 664, UCLA Department of Economics.
    14. William Marois, 1988. "Introduction," Revue Économique, Programme National Persée, vol. 39(5), pages 905-912.
    15. Buiter, Willem H, 1984. "Saddlepoint Problems in Continuous Time Rational Expectations Models: A General Method and Some Macroeconomic Examples," Econometrica, Econometric Society, vol. 52(3), pages 665-680, May.
    16. Läufer, Nikolaus K. A. & Sundararajan, Srinivasa, 1992. "Stabilization policy in multi-country models," Discussion Papers, Series II 170, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    17. William H. Branson, 1985. "The Dynamic Interaction of Exchange Rates and Trade Flows," NBER Working Papers 1780, National Bureau of Economic Research, Inc.
    18. Jeffrey A. Frankel, 1986. "The Sources of Disagreement Among International Macro Models and Implications for Policy Coordination," NBER Working Papers 1925, National Bureau of Economic Research, Inc.
    19. Rudiger Dornbusch & Stanley Fischer, 1986. "The Open Economy: Implications for Monetary and Fiscal Policy," NBER Chapters, in: The American Business Cycle: Continuity and Change, pages 459-516, National Bureau of Economic Research, Inc.
    20. Obstfeld, Maurice, 1982. "Relative Prices, Employment, and the Exchange Rate in an Economy with Foresight," Econometrica, Econometric Society, vol. 50(5), pages 1219-1242, September.
    21. Matthew Canzoneri & Robert Cumby & Behzad Diba, 2013. "Addressing International Empirical Puzzles: the Liquidity of Bonds," Open Economies Review, Springer, vol. 24(2), pages 197-215, April.

    More about this item

    Keywords

    Taux de change; Politique monétaire;

    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:hal:journl:hal-01304325. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc 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 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.