This paper is to survey recent developments in a theoretical analysis on exchange rate systems. Many of recent papers on an exchange rate band system use a stochastic process theory following a seminal paper by Krugman (1991) where he stressed a honeymoon effect of exchange rate bands. They have developed the stochastic process approach by relaxing assumptions of price flexibility, foreign exchange intervention, and credibility of exchange rate bands. We focus on a possible regime switching and credibility of keeping regimes which include the exchange rate bands and exchange rate systems. We consider how the credibility of the bands and the systems could affect on the honeymoon effect.
This paper analyzes the effects of two policy adjustments, namely exchange rate devaluation and the accumulation of budget surpluses, to the oil export boom in Indonesia. Our results indicate that exchange rate adjustment had a significant impact on expansion of tradable sectors, especially the manufacturing sector, by reversing the real exchange rate. While of maintaining the balanced budget principle, the government exercised delicate operations whereby the budget surpluses were covertly accumulated as government deposits. These policy adjustments were consistent from a macroeconomic management point of view and have contributed to avoiding the ‘Dutch Disease’ stemming from abundant oil revenue.
In a closed economy context, the literature dealing with entry and exit promotion policies is growing. It can be divided into two main groups: the model of symmetric oligopolists and that of asymmetric ones. The main purpose of this paper is to synthesize these analyses of symmetric and asymmetric cases by using the “Ikema-Cournot curve”, developed by Ikema (1991). Then, we extend these models to the one under the international oligopoly setting, and show some cases where entry-promotion policies raise domestic economic welfare even the domestic entrant's technology is inefficient.
This article deals with two particular aspects of the European regionalism. It is shown that in the secion 2 the EU is such a type of the supranational regional cooperation that is led by the neofunctionalism strategy for the purpose of preventing conflicts between nation-states, and in the section 3 the supranational cooperation causes the tentions around sovereignties and to resolve them the subsidiarity principle has been introduced as a new guiding principle, in turn, it leads to a new idea of the EU, ‘the Europe of Regions’, that would give a solution to ‘the democratic deficit’ by securing decentralization in member nations.