scholarly journals Optimal Inflation in an Open Economy with Imperfect Competition

2004 ◽  
Author(s):  
David M. Arseneau
Keyword(s):  
Open Economy ◽  
Imperfect Competition

scholarly journals Imperfect competition in an open economy

1992 ◽  
Vol 14 (5) ◽  
pp. 599-629 ◽  
Author(s):  
Nicos Christodoulakis ◽  
Martin Weale
Keyword(s):  
Open Economy ◽  
Imperfect Competition

Optimal inflation, monetary integration, and asymmetric sticky prices

2020 ◽  
Vol 72 (3) ◽  
pp. 710-730
Author(s):  
Wojtek Paczos
Keyword(s):  
Monetary Union ◽  
Open Economy ◽  
Imperfect Competition ◽  
Inflation Rate ◽  
Price Dispersion ◽  
Optimal Rate ◽  
Monetary Integration ◽  
Closed Economy ◽  
Price Stickiness ◽  
Trend Inflation

Abstract This article explores the optimal rate of trend inflation in open economies with and without a monetary union, accounting for empirically observed differences in the degree of price stickiness across countries. In a closed economy, the optimal inflation rate is negative to offset the markup caused by imperfect competition. In an open economy there is a ‘beggar-thy-neighbour’ incentive and the optimal inflation is positive. Monetary union is globally welfare improving because it removes this externality. In both setups, as price stickiness increases, the degree of price dispersion increases, and the optimal inflation rate tends towards zero. Gains from monetary integration are higher for economies with more flexible prices.

scholarly journals Environmental Taxation and Induced Structural Change in an Open Economy: The Role of Market Structure

2008 ◽  
Vol 9 (1) ◽  
pp. 17-40 ◽  
Author(s):  
Christoph Böhringer ◽  
Andreas Löschel ◽  
Heinz Welsch
Keyword(s):  
Structural Change ◽  
Open Economy ◽  
Computable General Equilibrium ◽  
Imperfect Competition ◽  
Economies Of Scale ◽  
Carbon Tax ◽  
Computable General Equilibrium Model ◽  
Perfect Competition ◽  
Environmental Taxation

Abstract Studies of structural change induced by environmental taxation usually proceed in a perfect-competition framework and typically find structural change to be quite moderate under realistic emission reduction scenarios. By observing that some of the industries affected are likely to operate under imperfect rather than perfect competition, additional mechanisms emerge which may amplify structural change beyond the extent identified as yet. Especially, changes in economies of scale may arise which weaken or strengthen the competitive position of industries over and above the initial cost effect. Using a computable general equilibrium model for Germany to examine the effects of a unilaterally introduced carbon tax, we find that induced structural change is more pronounced under imperfect competition than under perfect competition. At the macroeconomic level, we find that aggregate losses in economies of scale are larger than aggregate gains, implying that the total costs of environmental regulation are higher under imperfect competition than under perfect competition.

SHOULD THE PRIVATE SECTOR PROVIDE PUBLIC CAPITAL?

2007 ◽  
Vol 11 (3) ◽  
pp. 318-346
Author(s):  
SANTANU CHATTERJEE
Keyword(s):  
Open Economy ◽  
Public Capital ◽  
Borrowing Constraints ◽  
International Capital ◽  
Standard Assumption ◽  
Production Externalities ◽  
International Capital Markets ◽  
Private Provision ◽  
Large Production ◽  
Government Provision

The choice between private and government provision of a productive public good like infrastructure (public capital) is examined in the context of an endogenously growing open economy. The accumulation of public capital need not require government provision, in contrast to the standard assumption in the literature. Even with an efficient government, the relative costs and benefits of government and private provision depend crucially on the economy's underlying structural conditions and borrowing constraints in international capital markets. Countries with limited substitution possibilities and large production externalities may benefit from governments encouraging private provision of public capital through targeted investment subsidies. By contrast, countries with flexible substitution possibilities and relatively smaller externalities may benefit either from governments directly providing public capital or from regulation of private providers. The transitional dynamics also are shown to depend on the underlying elasticity of substitution and the size of the production externality.

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