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A Simple Model to Study Global Macroeconomic Interdependence

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  • Rod Tyers

    (University of Western Australia and Research School of Economics Australian National University)

Abstract

Insights into the international implications of China’s entry to the large economy club and the four-region strategic behaviour that results can be derived from applications of the elemental multi-region, macroeconomic simulation model introduced in this paper. It has a global general equilibrium structure that embodies bilateral linkages between represented regions via both trade and investment. Its behaviour is illustrated with an application to monetary policy following a period of deflationary expectations. Unilateral expansions are shown clearly to have negative real implications for the other large economies whose central banks are forced to respond in kind.

Suggested Citation

  • Rod Tyers, 2013. "A Simple Model to Study Global Macroeconomic Interdependence," Economics Discussion / Working Papers 13-23, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:13-23
    as

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    References listed on IDEAS

    as
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    5. Arora, Vipin & Tyers, Rod, 2012. "Asset arbitrage and the price of oil," Economic Modelling, Elsevier, vol. 29(2), pages 142-150.
    6. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    7. Rod Tyers & Ying Zhang & Tsun Se Cheong, 2013. "China’s Saving and Global Economic Performance," Economics Discussion / Working Papers 13-20, The University of Western Australia, Department of Economics.
    8. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2007. "Direct Investment, Rising Real Wages and the Absorption of Excess Labor in the Periphery," NBER Chapters, in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 103-132, National Bureau of Economic Research, Inc.
    9. Rod Tyers, 2012. "Japanese Economic Stagnation: Causes and Global Implications," The Economic Record, The Economic Society of Australia, vol. 88(283), pages 517-536, December.
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