Business Cycle Co-movements And International Economic Policy Coordination

During post-financial-crisis, existing patterns and mechanisms of internationaleconomic policy coordination are confronted new challenges, and business cycleco-movements and international economic policy coordination among countries areincreasingly concerned. Study on business cycle co-movements and economic policycoordination among developing countries and its trade partners, and confirm welfareeffects of macroUecononmic Rpolicye coogrdinaitiosn fotr edeveloping countries haveprofounding meaning. If China and USA sufficiently recognize their status andresponsibility, reinforce international economic policy coordirnation and consultation,and take forward monetary policy from a global perspective, their will beirreplaceable impacts on China and USA improving bilateral economic and traderelationship, regulating economic structural unbalance, and also on the world out ofthe global crisis and sustaining stable economic growth.The thesis first investigates definition, measurement and development ofinternational business cycle co-movements, and empirically analyses its maintransmission channels and their effects with panel data of China and its27tradepartners using OLS. Thus have an intuitive knowledge of relative contribution ofevery transmission channel that effects business cycle co-movements among China and its trade partners. It confirms the necessity of macroeconomic policy coordination empirically. The thesis construsts a theoretical model based on NOEM for China and USA monetary policy international coordination, considers the possibility of asymmetric shocks between two countries, uses game theory and policy reaction functions and welfare functions, thus further confirms the necessity and conditions of enhancing international monetary policy coordination theoretically. In open economy, investigate international transmission mechanisms and international coordination mechanisms of monetary policy, analyse spillover effects of monetary policy of China and USA, and decompose international coordination of monetary policies for GDP co-movements and consumption co-movements of China and USA, are conducible to fully learn welfare gains of international coordination mechanism of monetary policy. The thesis relates realistic performance of monetary policy coordination of China and USA since financial crisis, and then suggests an effective and long-term mechanism of monetary policy coordination between China and USA.The thesis both applies scientific economical methods and serious game theory, combining with theoretical and emepirical, static and dynamic analysis,and aehleves innovation in research objects, methods, dimensions and conclusions.The thesis concludes eight chapters.Chapter1, Introduction. It mainly introduce background and significance of topic, ideas and methods of research, struetnral arrangement and innovation of the thesis.Chapter2, literature review (?) business cycle co-movements and international economic policy coordination. It sorts literatures on business cycle co-movements definition and measurement, introduces meaning, objective, type and instrument of international economic policy coordination. It analyses and generalizes discussions on chansmission channel; of business cycle co-movement, such as international trade, foreign direct investment and international industry structural changes. It summaries models of international economic policy coordination, as studying open-economy international economic policy coordination from internal and external equilibrium policy mix, analyzing reasons of international economic policy coordination by game theory, evaluating welfare of international economic policy coordination from NOEM, quantizing welfare of international economic policy coordination empirically, and exploring scheme of international economic policy coordination.Chapter3, empirical analysis of international business cycle co-movements. It analyses developments and trends of business cycle co-movements among EU member countries, USA and EU members, China and its trade partners. It also studies chansmission channels and effects of international business cycle co-movements.Chapter4, theoretical model of international economic policy coordination. Itrefers measurement and methods on welfare of monetary policy internationalcoordination as Canzoneri et al.(2005), indroduces asymmetry of uncertainty ofshocks basing on practice, constructs a two-country-three-sector theoretical model ofinternational monetary policy coordination, and discusses welfare under differenthypothesis and optimal monetary policy.Chapter5, mechanism analysis of monetary policy international coordination. Itspecifies final objectives, medium objectives, instruments and chansmissionmechanisms of monetary policy in open economy, analyses internationalchansmission mechanisms of monetary policy under different exchange rate regime,further discusses functional orientation and mechanism design of monetary policyinternational coordination, which provides some reference for design monetary policyinternational coordination under new environment.Chapter6, welfare effects of monetary policy coordinatione betwdeen China and USA. It investgates internal effects and spillover effects of monetary policy of Chinaand USA after financial crisis using SVAR and impulse response function, and furtherexplores welfare effects of monetary policy coordination of China and USA onbusiness cycle co-movements and consumptiom co-movements.Chapter7, practical performance and assessment of monetary policycoordination of China and USA after financial crisis. It introduces influence offinancial crisis and policy measures of China and USA, and makes assessments onresults and problems of monetary policy coordination between two countries.Chapter8, conclusions and suggestions. It summaries important conclusions andmakes several suggestions on monetary policy coordination between China and USA,and on China’s participation in monetary policy international coordination.