Foreign Asset Accumulation, Macroeconomic Policies and Mercantilism

Gaowang Wang and Heng-Fu Zou ()
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Gaowang Wang: Central University of Finance and Economics

No 461, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: The paper studies fiscal policy, monetary policy and the exchange-rate theory in a Viner-Zou monetary model of mercantilism. It is shown that, except for government consumption, permanent increases in the mercantilist sentiments, monetary growth rate, consumption tax, and foreign exchange intervention have positive effects on consumption and foreign asset accumulation in the long run; and, in the short run, except for negative effects on both consumption and foreign asset accumulation of government consumption and positive effects on both consumption and foreign asset accumulation of foreign exchange intervention, other macroeconomic policies, including the mercantilist sentiments, monetary growth rate, and consumption tax, have negative effects on current consumption and positive effects on current foreign asset accumulation. The combination of both long-run and short-run analyses reveals the real dynamic implications of mercantilism.

Keywords: Foreign Asset Accumulation; Macroeconomic Policies; Mercantilism; Laplace Transform Method (search for similar items in EconPapers)
JEL-codes: F31 F32 F41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-05
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:461

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