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Essay on Financial Innovation, Credit Constraints, and Welfare
Janíčko, Martin ; Chytil, Zdeněk (advisor) ; Tlustý, Adolf (referee) ; Pavelka, Tomáš (referee) ; Frait, Jan (referee)
The submitted thesis is composed of three different articles dealing with issues of financial innovation, credit constraints, and their impact on welfare. The first article treats the contemporary theoretical grasp of the interaction between the financial and real economies, focusing primarily on the role of modern financial innovation in the business cycle. For this purpose, a framework promoted by the Regulation School and Post Keynesians is frequently employed, whilst some other unorthodox streams and mainstream economics are partially discussed as well. All of them aspire -- either per se or under the pressure of the contemporary economic agenda -- to clarify the evolution of financial innovation and credit in the recent era. It is generally found that certain consensus across the schools of economic thought exists, but some of them have done a better job in predicting the consequences of the financial innovation for real economic activity than others. Further, two dynamic macroeconomic models are developed in order to, inter alia, identify the possible effects of extended credit availability presented in the former article on the example of the housing market, and simulate the effects of housing price changes on general welfare. Clearly, this part of the thesis exhibits the indirect consequences of financial innovation as, once again, being rather ambiguous: after having partially unleashed the unprecedented credit granting in the economy, impacting interest rates and loan-to-value ratios, with a subsequent impact on housing prices, it has also influenced credit constrained and unconstrained households in a different manner. Based on an analysis of the situation using partial and general equilibrium analytical frameworks, two somewhat different conclusions are drawn up with respect to the occurrence of various shocks in the models. Under the partial equilibrium framework the effects of relaxation of credit constraints are visible and quite straightforward, indicating relatively simple and intuitive relationship between the price appreciation and general welfare. This is primarily perspicuous for the credit constrained households. In the general equilibrium framework, on the other hand, the transitional dynamics of shock proliferation is more transparent and the impact on credit constrained vs. unconstrained households is more ambiguous and much different from the basic intuition used in the article anchored in the partial equilibrium toolbox.
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Monetary disequilibrium in the theory of endogenous money
Korda, Jan ; Koderová, Jitka (advisor) ; Mach, Miloš (referee) ; Mertlík, Pavel (referee)
The thesis deals with monetary disequilibrium in the theory of endogenous money. In the new consensus economics, money is endogenous and passive. Money market is not considered and if yes, then only in an implicit equilibrium, whereas mechanisms ensuring this equilibrium are not discussed. In post-Keynesian economics, there is an explicit discussion, whether monetary disequilibrium may occur. Horizontalists argued for equality of money supply and money demand. On the other hand, arguments of some structuralists based on an independent demand for money function show that monetary disequilibrium may occur. The thesis therefore analyses mechanisms ensuring equilibrium in the money market. The only mechanism among them which enables the passivity of money is the reflux mechanism. However, it can not be regarded as universal since not all economic subjects which create demand for money are in debt to the banking system. For that reason accommodation of some factors of money demand function is necessary and money is endogenous and active. Econometric tests studying independent money demand and the consequent possibility of monetary disequilibrium based on Granger causality tests seem to be methodologically problematic and showing mixed results. Monetary disequilibrium can not be ruled out. Contemporary monetary policy based mainly on new consensus approach thus omits one channel of monetary policy transmission. Theoretical analysis suggests that monetary equilibrium has to be (at least partly) restored through changes in factors of money demand, which can lead to changes of other macroeconomic variables including inflation.
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Austrian and Post Keynesian theory of business cycle: Substitute or complement?
Uhliarová, Lucia ; Janíčko, Martin (advisor) ; Kindlová, Eva (referee)
Neither Austrian nor Post Keynesian school is part of contemporary economic mainstream, both schools explain business cycle theory by monetary influences. This thesis examinates, through analysis of these theories, whether there are any other common elements except of the fact that both are monetary theories of business cycle. The key question author tries to answer is if we can describe these theories as substitute or complement. In last part theoretical analysis is enriched by the scale, which reflects substitution or complementary nature of the theories.
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The role of the central bank within the framework of endogenous money
Horváthová, Kateřina ; Chytil, Zdeněk (advisor) ; Mirvald, Michal (referee)
Abstract This bachelor thesis discusses the role of the central bank within the framework of the theory of endogenous money. The first part of the thesis gives an overview of the historical development concerning the theory of money: From the quantity theory of money to the new quantity theory of Milton Friedman, concluding with the Keynesain theory of money. The second part focuses on the endogenous theory of money. The third part discusses the role of the central bank in terms of this theory.
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