Date of Award
Doctor of Philosophy
The Group of Twenty, or G20, is the premier forum for international cooperation on the most important aspects of the international economic and financial agenda. G20 brings together the world's major advanced and emerging economies. It together represents around 90% of global GDP, 80% of global trade, and two thirds of the world's population according to the report of G20 official website. The first essay investigates the effects of money supply on selected G20 economies. According to the Nobel Laureate Friedman, money shocks will effect output in the short-run and will effect prices in the long-run. Also, the increased monetary growth tends to lower interest rates at first, but later on, the resulting acceleration in spending and inflation produces a rise in demand for loans, which tends to raise interest rates. The purpose of this study is to test Friedman's proposition empirically for 12 selected countries from G20 during 1980 to 2010. Our findings suggest that both price level and output have similar responses to monetary innovation in most sample countries, which is not consistent with Friedman's proposition. However, the interest rates' responses of these countries validate the Friedman's proposition. In addition, we find that money Granger-causes output, prices, and interest rates in most countries. Although our results do not provide strong evidences about the responses of output and prices as Friedman stated, we find that money matters, and policy makers should be cautious to adopt expansionary monetary policy to stimulate economic growth in these countries. The second essay investigates the relationship between private sector and exchange rates in 15 selected countries from G20 during the period 1980-2010. In examining the determinants of exchange rate, many researchers have focused on the role of public sector only. However, we believe that private sector is also an important component of an economy, and private sector has influences on the exchange rate. This study investigates the relationships between private sector and exchange rates in 15 countries from G20 during the period 1980-2010. We note that private sector investment is important for exchange rates in most developed countries. Also, exchange rates are found to Granger-cause private sector investment. Thus, there are feedback relationships between private sector and exchange rates in most sample countries. The study provides vital information relevant for policy formulation and implementation. In order to stabilize the exchange rates, policymakers need to adjust strategies to control private capital inflows. To provide a sound environment for private sector development, governments should differentiate the types of exchange rates risk in order to design and implement consistent policy to deal with issues at hand. In addition, exports play a key role in the economies of most developing countries. Many economists such as Ram (1987) and Ekanayake (1999) prove that good exports performance make big contribution to economic growth. The third essay investigates the hypothesis whether exports volume of Indonesia, Philippine, Singapore, and Thailand are effected by exchange rate volatility of their main export receiving countries, i.e., U.S. and Japan. During the period 1980-2010, exports volume in Indonesia, Philippine, Singapore, and Thailand increased fast, and their main export receiving countries were the developed countries, i.e., U.S. and Japan. This study mainly investigates the effects of exchange rate volatility of U.S. and Japan on the exports volume of these exporting countries. Our findings suggest that there are impacts though exchange rate volatility of U.S. and Japan on exports volume of Indonesia, Philippine, Singapore, and Thailand. To investigate this topic is important to help exporters avoid risk and policymakers justify their policies and exchange rates.
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