Transaction Costs, Multiple Equilibria, and the Mundell Proposition

Asian Economic and Financial Review

关键词: Transaction costs;    Multiple equilibria;    The mundell proposition.;   

学科分类：社会科学、人文和艺术（综合）

来源: Asian Economic and Social Society

【 摘 要 】

This paper inserts Coase (1937) assertion into Mundell (1963) model. That is, investigating the robustness of Mundell (1963) proposition with the consideration of transaction costs in the labor market. The result shows that the existence of transaction costs makes the externalities of transaction costs in the labor market. Therefore, labor market appears to be multiple equilibria. If labor market appears as low-employment equilibrium, the Mundell proposition cannot work thoroughly under both fixed and flexible exchange rates. If labor market appears as high-employment equilibrium, the Mundell proposition is valid under fixed exchange rates but will be invalid under flexible exchange rates.

【 授权许可】

CC BY