TARIFF, CONSUMPTION HOME BIAS AND MACROECONOMIC DYNAMICS
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 8
Abstract
In this paper, New Open Economy Macroeconomics is served as an analytical framework to build a setting which is in line with structure of an imperfectly competitive market, we follow an open economy model with micro-foundation for two countries to explore the long-term and short-term effects of tariff shock on various macroeconomic variables (e.g. consumption, output, prices, exchange rate, terms of trade, and so on), and try to explain the role that consumption home bias plays therein. With theoretical derivation and simulation analysis, we find that the phenomenon such as undershooting, overshooting or mis-adjustment might happen to the dynamic adjustment process of each macroeconomic variable in face of domestic tariff shock while domestic and foreign consumers who have asymmetric behavior of consumption bias on the imported and exported goods.
Authors and Affiliations
Chung-Fu Lai| Department of Applied Economics, Fo Guang University, Yilan County, Taiwan
Keywords
Related Articles
- EP ID EP2290
- DOI -
- Views 506
- Downloads 40
CORPORATE INVESTMENT AND CASH-FLOW SENSITIVITY: EVIDENCE FROM A JASMIN REVOLUTION PERIOD IN TUNISIAN MARKET
This study investigates the impact of financial constraints on investment decisions and corporate cash holding of Tunisian firms over the period of 2003-2013. We will investigate this task in a particular context which i...
CORPORATE GOVERNANCE AND INFORMATION TRANSPARENCY: A SIMULTANEOUS EQUATIONS APPROACH
The purpose of this paper is to review the relationship between corporate governance mechanisms and information transparency. In this paper, we aim to answer the important questions of whether corporate governance affect...
THE EFFECT OF OIL INCOME ON REAL EXCHANGE RATE IN IRANIAN ECONOMY
This paper investigates the effect of oil income on real exchange rate defined in Iranian economy from 1981 to 2012. This study uses Unit Root Tests, Cointegration techniques, Engle-Granger test, Vector Error Correction...
THE IMPACTS OF THE QUALITY OF THE ENVIRONMENT AND NEIGHBOURHOOD AFFLUENCE ON HOUSING PRICES: A THREE - LEVEL HIERARCHICAL LINEAR M ODEL APPROACH
This paper employs a three-level hierarchical linear model (HLM) to examine the impacts that the quality of the environment and neighbourhood affluence have on housing prices. The empirical results suggest that there are...
OIL PRICE VOLATILITY AND ITS CONSEQUENCES ON THE GROWTH OF THE NIGERIAN ECONOMY: AN EXAMINATION (1970-2010)
This study examines the consequences of oil price volatility on the growth of the Nigerian economy within the period 1970 to 2010. Using quaterly data and employing the VAR methodology, the study finds that of the six va...