ESSAYS ON MONEY, PATTERN OF TRADE, AND ECONOMIC GROWTH IN THE WORLD ECONOMY

The study of long-run interaction between monetary expansion and the pattern of economic growth has been an important subject in economics. Despite extensive works have been done in the literature, most researchers in this area have dealt with closed economies but little has been done to study this class of problems for open economies.;The thesis is organized into five chapters: an introductory chapter and four content chapters. Chapter 2 develops a two-country, two sector, two-currency model and examines the impacts of a monetary expansion on the patterns of economic growth and international trade. Chapter 3 extends the comparative dynamic analysis to a Keynesian-type monetary trade model. The major findings in Chapter 2 and Chapter 3 is that the traditional hypothesis, which asserts that a domestic monetary expanion will in the long run unambiguously increases domestic capital intensity at the expense of the foreign economy, is not necessarily true. I demonstrate the existence of a perverse outcome even under the condition that the trading system is stable.;Utilizing an intertemporal optimization approach, Chapters 4 and 5 develops a rigorous microfoundation for the open economy monetary growth theory. The unique feature of my approach is the incorporation of a variable rate of time preference into the intertemporal optimization process. In Chapter 4, the characteristics of dynamic competitive equilibrium of a two-country two-sector world economy that emerge under different rates of monetary expansion are rigorously examined. In Chapter 5, I analyze a stylized North-South trade model and study how the structural differences in an advanced country and a less developed economy can produce the asymmetrical effects of monetary policies on the patterns of economic growth and international trade of these countries. The implications of using monetary policies as a development instrument are also studied.;The purpose of this dissertation is to study the long-run interactive relationships among monetary expansion, the process of economic growth, and the pattern of international trade in an economy that is open to trade with other countries. This is primarily a theoretical extension of the classical closed economy models of money and growth to open economies. It also represents a synthesis of the dynamic models of international trade with fast-growing monetary economics. On the policy perspective, this research attempts to trace the possible consequences of a monetary policy on the patterns of economic growth and international trade in the context of open economies.