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英国金融硕士论文范文-IS-LM-BP: an inquest-The Trade Cycle and Economic

IS-LM-BP: an inquest
英国金融硕士论文范文Warren Young and William Darity, Jr.
Introduction Open economy macroeconomics is not a new field of theoretical enquiry. Its origins can be traced back to mercantilist and classical notions of the impact of the trade balance, gold flows and exchange rate mechanisms (e.g. Hume, 1752). But formal mathematical models of trade and capital flows and exchange rate movements are a much more recent development, emerging only over the past 60 years. In the same year as the publication of Keynes’ General Theory, Harrod and Meade also published significant works, The Trade Cycle and Economic Analysis and Policy respectively, parts of which dealt with floating exchange rates and “free capital movements”. This and subsequent work of Meade and Metzler, among others, stimulated a generation of theorists to develop what Mundell calls the “international macroeconomic model” (Mundell, 2002).
In our previous work, we examined the development of the early mathematical models of IS-LM closed economy vintage (Darity and Young, 1995). In this paper, we attempt to do the same for the open economy version of IS-LM. Now, there are a number of the general accounts of the evolution of the open economy macroeconomic model, including those of Kenen (1985), Flanders (1989), and Isard (1995), and specific accounts of the evolution of the "Mundell-Fleming model" by Blejer et.al (1995), Boyer (2002), Boughton (2003), and Mundell himself (1999, 2001, 2002). But up to now, the specific development of IS-LM-BP, as distinct from the "Mundell-Fleming” story as told by Mundell, among others, has not been dealt with. Indeed, as will be shown, IS-LM-BP has a history parallel to the story of Mundell’s models and Fleming’s model as told by Mundell, Boyer and Boughton. In this context we must 1
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distinguish between the “Mundell-Fleming” model synthesized by Dornbusch, that is, with flexible exchange rates and perfect capital mobility only (Dornbusch, 1980, 193-194) and the more general IS-LM-BP framework, which encompasses both fixed and flexible exchange rates and all degrees of capital mobility.
The paper is divided into four sections. Section 1 deals with the early mathematical models of the open economy, including Metzler’s pioneering 1942 model and the Laursen-Metzler model (1950); Metzler’s 1951 JPE model is also briefly discussed as it influenced Mundell, on Mundell’s own account. This section also deals with the impact of Meade’s 1951 model and Metzler’s models on Mundell’s work. In this context, we will integrate the relevant parts of Mundell’s accounts of the development of his models (1999,2001,2002). Section 2 surveys the early 1960s—the years of "high theory"-- and deals with the characteristics of Mundell’s models from 1960 to 1964, and compares them to Fleming’s 1962 model. Section 3 deals with the diagrammatic development of IS-LM-BP as it emanated from the important generalized model of Krueger (1965); the “overlooked” linkage of Krueger’s model to the “Hicksian IS-LL construct” made by Michaely (1968); Takayama’s 1969 “general equilibrium model” based upon the open economy extension, that is “straightforward use”, of IS-LM; the somewhat forgotten “IS-LM-EE” approach of Wrightsman (1970); to the appearance, in Branson’s widely-used 1972 textbook, of IS-LM-BP with fixed exchange rates; all this before Dornbusch’s synthesis of Mundell’s models and Fleming’s model into what he called the “Mundell-Fleming” model (1976-1980). This section also deals with Dornbusch’s contribution to the IS-LM-BP story, that is, his “Mundell-Fleming” synthesis and its extensions.



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