International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.1 Robert Mundell (1932 – )
1
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.2 Overview of Chapter 25, short-run analysis
Fixed exchange rates
25.2 Small country, perfect capital mobility
25.3 Large country, perfect capital mobility
25.4 Small country, imperfect substitutability
Flexible exchange rates
25.5 Small country, perfect capital mobility
25.6 Large country and imperfect substitutability
2
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.3 Money expansion (dashed line accomodates)
small country, fixed exchange rates, perfect capital mobility, short-run
i
IS
LM0
LM1
E0
i = if
E'
y0
y
3
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.4 Fiscal expansion (dashed line accomodates)
small country, fixed exchange rates, perfect capital mobility, short-run
i
IS0
IS1
LM0
LM1
E'
E0
E1
y0
y1
i = if
y
4
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.5 Money expansion in Home; large country, fixed exchange rates
i
ISe
LMe0
LMe1
E0
i0
i1
E1
y0
y1
y
5
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.6 Monetary expansion
small country, fixed exchange rates, imperfect substitutability, short-run
i
IS
K0
E0
i0
K1
i1
E1
K0
K1
y0
y1
y
6
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
7
Figure 25.7 Estimated offset coefficients, various countries
Shaded bars do not differ statistically significantly from (-) one.
(minus) Estimated offset coefficients
Sweden
Spain
Australia-2
Various LDCs
Germany
Japan
Netherlands
Australia-1
Italy
0
0.2
0.4
0.6
0.8
1
1.2
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.8 Money expansion (dashed line accomodates)
small country, flexible exchange rates, perfect capital mobility, short-run
i
IS
LM0
E0
LM1
E1
i = if
E'
y0
y1
y
8
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.9 Fiscal expansion (dashed line accomodates)
small country, flexible exchange rates, perfect capital mobility, short-run
i
IS0
IS1
LM
E'
E0
i = if
y0
y
9
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
Figure 25.10 Fiscal expansion in Home; large country, flexible exchange rates
i
y1
yf1
y0
yf0
E1
E0
y1
yf1
y0
yf0
s+pf -p
10
International Economics: Theory, Application, and Policy, Ch. 25;  Charles van Marrewijk, 2006
11
Figure 25.11 Economic developments in Japan, 1980-2003
b. Japan; money growth and inflation (%)
a Japan; GDP growth and unemployment (%)
12
8
money growth
10
GDP growth
6
unemployment
8
4
6
4
2
inflation
2
0
1980
-2
1985
1990
1995
2000
2005
0
1980
-2
1985
1990
1995
2000
2005