Speak(s): Sun Hefeng
Date: October 10th, 2012
Time: 2:30-4:30pm
Venue: Class room 868
Abstract: This paper mainly aim at the government's policy objectives to build a partial equilibrium model and a general models. Different from other models, the two models concerns imported intermediate goods in calculating a basket of currencies of optimal weights correspondingly. Our research shows that if the government wants to keep the trade balance unchanged only when the elasticity of demand is equal to unit elastic or maintain the trade balance with every country, the optimal weights is independent from input factors’ price elasticity of intermediate goods. When the government pursues a stable output, output elasticity of imported intermediate goods will affect the optimal weights. If the monetary authorities do not consider the impact of imported intermediate goods, it will lead to overestimation or undervaluation of the optimal weights, and thus have an impact on the real economy.