Business cycles and monetary policies in a small open emerging economy

Student thesis: Doc typesDoctor of Economics and Business Management

Abstract

Developing and emerging economies often face large business cycle shocks - such as commodity term of trade shocks - exacerbated by incomplete financial markets. These specificities generate strong business cycle fluctuations accompanied by large detrimental welfare effects. Demand management tools such as monetary and fiscal policies could therefore ease this burden by effectively mitigating aggregate volatility. A prerequisite for implementing appropriate stabilisation policies is to build a structural model capable to explain macroeconomic fluctuations. This in turn requires a profound understanding of the specificities driving the business cycle. This thesis describes the domestic and external driving forces behind business cycle fluctuations in developing and emerging countries. It then presents a Dynamic Stochastic General Equilibrium (DSGE) model capable to explain the transmission mechanisms of these shocks. Within this framework, it measures the welfare cost of business cycles fluctuations for different types of agents that are included or excluded from the financial markets. Finally, it assesses the efficiency of a number of monetary policy rules such as inflation targeting or output and exchange rate stabilisation.
Date of Award28 Sep 2018
LanguageEnglish
Awarding Institution
  • University of Namur
SponsorsUniversité de Namur
SupervisorRomain Houssa (Supervisor), Jean-Marie Baland (President), Paul Reding (Jury), Yuliya Rychalovska (Jury), Christopher Otrok (Jury), Rafael Wouters (Jury) & Nicola Viegi (Jury)

Cite this

Business cycles and monetary policies in a small open emerging economy
Mohimont, J. (Author). 28 Sep 2018

Student thesis: Doc typesDoctor of Economics and Business Management