Trade War and the Balanced Trade-Monetary Theory
Publish Year: 1400
نوع سند: مقاله ژورنالی
زبان: English
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شناسه ملی سند علمی:
JR_JMMF-1-2_007
تاریخ نمایه سازی: 18 بهمن 1400
Abstract:
One of the longest-lasting controversies in the international macroeconomic literature is the purchasing power parity theory. It is the most controversial subject that has been tested with various econometric models in different timeframes and geographic data sets. It is a common assumption used regarding the exchange rate and the validity of the Law of One Price. The present article aimed to present a new model to estimate the fair value of exchange rate which is one of the most critical factors in trade balance among countries, based on balanced trade-monetary theory by assessing the under or over-valuation of currencies. We can assume that a country with a strong economy should have strong money and vice versa. The results showed undervaluation of the dollar versus Yuan, Pound and Yen by ۱.۴۱, ۱.۱۴۹, and ۱.۱۲۶ times, respectively in ۲۰۱۸. Therefore, among the U.K., China, and Japan, Japan and the U.K. had a better trade balance with the U.S. than China
Keywords:
GDP per-capita , balanced trade ratio , Balanced Trade-Monetary Theory , Purchasing Power Parity (PPP) , Consumer Price Index (CPI)
Authors
Saeid Tajdini
Postdoc of Finance, Faculty of Economics, University of Tehran, Tehran, Iran
Amir Hamooni
Ph.D. candidate in Economics Department, University of Tehran, Iran
Jamal Maghsoudi
Master of Science in Financial Management, University of Tehran, Tehran, Iran
Farzad Jafari
Department of management, University of Tehran, Tehran, Iran
Majid Lotfi Ghahroud
Department of Management, Faculty of financial management, University of Tehran, Tehran, Iran