Recent Working
Papers:
- Lin, Yo-Long,
"Inflation Bias, Real Exchange Rate
Channel, and Optimal Monetary Policy in An Open Economy."
[Abstract] It is well-known that
there are unique challenges to design optimal monetary
policy in an open economy since an effort by one countryˇ¦s
expansionary policy to inflate may depreciate its currency,
which induces greater domestic inflation through the real
exchange rate channel. Due to the above tempering influence,
monetary authorities realize that lowering unemployment is
more costly. To investigate the impact of any exogenous
change in the natural rate of unemployment on the optimal
time consistent monetary policy, we present a two-country
framework to compare the minimal-state-variable rational
expectations equilibria under three different scenarios:
coordination, non-coordination, and leader-follower regimes.
The theory demonstrates that, under coordination, an
exogenous increase in one countryˇ¦s natural rate of
unemployment, which may yield a greater degree of inflation
bias, will induce the other country to inflate and this
cross-countries effect goes through the real exchange rate
channel. Moreover, under either coordination or
non-coordination, the impact of the volatilities of one
countryˇ¦s natural rate of unemployment on its own inflation
depends on the relative strength of the effect of real
exchange rate channel and the expansionary effect of
unanticipated inflation surprises.
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- Lin, Yo-Long, Jin-Xu Lin, and Yungho
Weng, "Causality between Exports
and Growth in Manufacturing Industries: Evidence from Taiwan."
[Abstract]
Even though the
relations between export expansion and output growth has been proven
in Taiwanˇ¦s macroeconomic data, the causal links between exports and
domestic production in Taiwanese individual manufacturing industries
still need to grasp. The purpose of this paper is to investigate
whether the empirical causalities in macroeconomic variables still
sustain in industry-level data over the period 1982: M01ˇV2002: M07,
during which Taiwan generated successful performance in both exports
and economic growth. The individual-industry diagnosis shows that
the causal links between exports and domestic production vary across
industries, and emphasizes the implications of industry
characteristics (i.e., market orientation and technological
intensity) on such causal relations.The results serve as evidence
that production expansion strategy can benefit low-technology export
oriented industries and shrink the export sectors in most
domestically-oriented industries. Moreover, median-high-technology
export-oriented industries can gain benefits from export expansion
strategy.
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- Lin, Yo-Long,
"Exporting Inflation and Escape
Dynamics in An Open Economy."
[Abstract]
How did an expansive
monetary policy in one country, say the United States,
spread high inflation to other countries during 1970s-80s?
Two intuitions have been used to answer this question. One
is from Sargent (1999), who asserts that the government's
attempts to exploit a trade-off empirical Phillips curve
would yield an inefficiently high inflation. The other is
from Rogoff (1985), who claims that international
coordinated policy between central banks can produce an
excessively high inflation. This paper aims to combine these
two intuitions to investigate how the international monetary
policy interaction affected the transmission of inflation
across countries during and after the Bretton Woods era. Our
finding reveals that sudden policy regime switching from
leader-follower system to non-coordination scenario makes
policymakers come to realize that there exists an
expectations-augmented Phillips curve embodying a version of
the natural rate hypothesis. Moreover, our simulation
results can explain why inflation arose again after the
collapse of Bretton Woods system then decreased to a lower
level in the early 1980s.
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- Lin, Yo-Long, "International
Labor Mobility, Minimum Wage, and Economic Fluctuations."
(Grant:
NSC 102-2410-H-260-005)
[Abstract]
The theoretical paper incorporates
recursive dynamic approach within a
three-technological-capability economy to investigate the
impacts of international labor mobility on economic
fluctuations and the
minimum wages
in three economies. The framework highlights the
interpretations provided by the mechanism are adequate us to
realize how high- and low-skilled labors moves from one
country to the other in terms of their rational expectation
choices. The model also serves as a bridge between wage and
employment dynamics and the real world, and derives some
requirement conditions where high- and low-skilled labor
migrate from one country to the other, which provides some
policy insights by the model.
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- Lin, Yo-Long,
"Environmental Policy, Lobbying,
and Welfare."
[Abstract]
The
theoretical paper presents a two-country two-stage game
framework to investigate how the determinants of
environmental and trade policies influence aggregate social
welfare and equilibrium quantity under the interventions of
lobbying groups, where environmental taxes and tariffs are
both endogenously adjusted to reflect policy considerations
of the government. This paper derives the feasible
conditions for environmental levy under different lobbying
scenarios, and demonstrates that the potential gains to
social welfare depend on the relative strength of cost
competitiveness of production and the degree of pollution.
Moreover, the relative changes between social welfare
outcomes under different lobbying structures go through two
distinct channels: the effect of quantity of aggregate
outputs is significant when pollution degree is at an
intermediate or a low level, while the effect of
environmental tax revenue is significant when pollution
becomes severe.
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Working in Progress:
- Lin, Yo-Long, "Exchange
Rate Target Zone, Interventions, and Learning Dynamics."
(Grant: NSC
100-2410-H-260-025)
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- Lin, Yo-Long, "Economic
Growth Types and Time-inconsistent Monetary Policy."
(Grant:
MOST 103-2410-H-260-002)
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