TRANSACTION COSTS, MULTIPLE EQUILIBRIA, AND THE MUNDELL PROPOSITION

Journal Title: Asian Economic and Financial Review - Year 2014, Vol 4, Issue 11

Abstract

This paper inserts Coase (1937) assertion into Mundell (1963) model. That is, investigating the robustness of Mundell (1963) proposition with the consideration of transaction costs in the labor market. The result shows that the existence of transaction costs makes the externalities of transaction costs in the labor market. Therefore, labor market appears to be multiple equilibria. If labor market appears as low-employment equilibrium, the Mundell proposition cannot work thoroughly under both fixed and flexible exchange rates. If labor market appears as high-employment equilibrium, the Mundell proposition is valid under fixed exchange rates but will be invalid under flexible exchange rates.

Authors and Affiliations

Hong-Yu Lin| Department of Business and Management, Ming Chi University of Technology, Taishan, Taiwan

Keywords

Related Articles

U.S.-SINGAPORE COMMODITY TRADE AND THE J-CURVE

Limited number of studies that investigated the short-run (J-Curve) and long-run effects of currency depreciation on the trade balance of Singapore either used aggregate trade data between Singapore and rest of the world...

The Technical Efficiency of Nigerian Banks

This study provides an insight into the technical efficiency of Nigerian banks. The Data Envelopment Analysis (DEA) approach was employed to derive the efficiency scores of the various banks. A total of 67 banks, made up...

RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH, EVIDENCE FROM FINANCIAL CRISIS

This research studies the influence of financial development on economic growth with emphasis on the recent financial crisis. Variables considered in this study are indicators of financial development consisting of the r...

Assessing Determinants of Macroeconomic Policy on Real Convergence and Growth: A Comparative Study of the Eurozone and ASEAN

This study mainly examines the role of macroeconomic policy variables associated with Maastricht Convergence Criteria (MC), using various approaches to analyze comparatively differences in growth and convergence in incom...

IMPACTS OF INTERNATIONAL OIL PRICE CHANGES ON VIETNAM’S ECONOMY - AN INPUT-OUTPUT STUDY

In this paper we investigate the impacts of international oil price changes on Vietnam?s economy by using an input-output analysis. The goals of our study are: 1. establishing a price sub-model and output sub-model in th...

Download PDF file
  • EP ID EP2105
  • DOI -
  • Views 277
  • Downloads 27

How To Cite

Hong-Yu Lin (2014). TRANSACTION COSTS, MULTIPLE EQUILIBRIA, AND THE MUNDELL PROPOSITION. Asian Economic and Financial Review, 4(11), 1653-1673. https://europub.co.uk/articles/-A-2105