Essays on international economics and macroeconomics.

Abstract

The first chapter, entitled "Dumping in a Linder Model of Trade, " provides an explanation for a recent proliferation of price dumping and antidumping laws. The last decade has witnessed an accelerating adoption of antidumping (AD) laws by the less developed countries (LDCs) and their increasing usage against the developed countries (DCs). This is explained by a model of third degree price discriminations with heterogeneous consumers that have differing preferences for quality in the two countries. Duopolistic interaction may yield bilateral or unilateral dumping in either direction under free trade. Even when dumping is unidirectional, there is a compelling basis for the introduction of AD laws by both governments. This mitigates competition, which is beneficial for both firms, and portends pessimism for an abatement of this recent proliferation of AD laws and complaints.

The second chapter is entitled "Inflation and Credibility of Monetary Policy: The Case of Inflation Targeting" which investigates the credibility of monetary policy under inflation targeting regime. Credibility has become an important issue in the setting of monetary policy because it can dramatically increase the policy effectiveness. The goal of this paper is to capture the evolution of the credibility of monetary policy as well as the policymaker's intention in the recent adoption of inflation targeting regime. Through the technique of a state space representation and Kalman filtering, the results indicate that monetary authority's credibility in fighting inflation has improved after the adoption of inflation targeting. However, the credibility in countries without explicit targets has also been raised. We conclude that keeping a good track record of low inflation may be better than merely announcing target in achieving credibility.

Macroeconomics is concerned with the overall economic structure and performance of a nation. The understanding of macroeconomics is of crucial importance due to its impact on analyzing economic well-being, government policy, and economic decisions made by individuals. On the other hand, the importance of international economics has never been as clear as it is today due to the fact that the economies of different nations in the world are more closely linked to each other now than ever before. The purpose of this dissertation is to study the important subjects under macroeconomics and international economics, respectively.