Kanematsu Seminar

RIEB Seminar

Monday, February 28, 2022, 3:00pm - 4:30pm

RIEB Seminar

Jointly supported by Workshop on International Finance

Date & Time Monday, February 28, 2022, 3:00pm - 4:30pm
Place Online Seminar by Zoom
Intended Audience Faculty, Graduate Students, and People with Equivalent Knowledge
Langage Japanese
Remarks Please complete the registration before February 24. Meeting URL will be informed later.
Registration Form (Due: Feb 24)
3:00pm~4:30pm
Topic
The Role of Local Currency Pricing in the International Transmission Effects of a Government Spending Shock in an Economy with Vertical Production Linkage and Foreign Direct Investment
Speaker
Kohjiro DOHWA (Faculty of Economics and Business Administration, Kyoto University of Advanced Science)
Abstract
By constructing a two-country model with asymmetry in price-setting behavior between home and foreign intermediate goods firms, vertical production and trade, and endogenous entry of three types of final goods firms, this paper examines the effects of a home government spending shock. In particular, it focuses on the role of asymmetry in price-setting behavior between home and foreign intermediate goods firms. A home government spending shock is shown to result in the entry of multinational firms from both countries, an increase in the aggregate outputs of both countries, a deterioration in home welfare, and an improvement in foreign welfare. In addition, with an increase in the ratio of home and/or foreign intermediate goods firms setting their export prices in the local currency, the effects of this shock on the entry of home multinational firms, the increase in aggregate foreign output, the deterioration in home welfare and the improvement in foreign welfare are shown to be weakened, while the effects of this shock on the entry of foreign multinational firms and the increase in aggregate home output are intensified.
ENGLISH