Redman, Milton

This thesis examines how the various instruments of monetary and fiscal policy work in the presence of fixed and flexible exchange rates. Based on the pioneering work of Mundell and Fleming, the traditional view assigns fiscal policy as being highly suitable for a fixed exchange rate regime, while stimulative monetary policy is effective in raising output under floating exchange rates. Once the implicit assumptions of constant prices and wages are relaxed, the conclusions of the original model no longer hold. With the introduction of wage indexation as a mean to adjust nominal wages to changes in the price level, the initial results of policies of the Mundell-Fleming type are reversed. Finally, it was examined how the practical implications of policy actions of the United States and West Germany could be applied to the theoretical models.

This thesis uses a fundamentalist approach to portfolio selection similar to
that proposed by Benjamin Graham. The purpose is to examine the existence of
undervalued securities and to test a methodology designed to identify those that
could be considered superior investments. The model designed to select, combine
and evaluate performance on risk adjusted basis takes into consideration
fundamental principles of modern portfolio theory. Specifically, this analysis
evaluates the informational contribution of price earnings ratios, earnings growth
and dividend payments. The hypothesis tested is that undervalued securities
selected under the conditions here proposed can produce performance results
consistently superior than those of a strategy based on passively holding a market
portfolio.

This thesis deals with the effect of the fiscal and monetary
policies in the models of the balance of payments for
a small country model with and without nontraded goods.
The first chapter provides an introduction. In Chapter
Two, a balance of payments model which makes no distinction
between traded and nontraded goods is examined under the
fixed and flexible exchange rates. In Chapter Three, the
definition of nontraded goods is given and the Dornbush
model is analyzed in the case of demand shift from the
traded goods to nontraded goods and the transfer payments
to the foreign country. In Chapter Four, a balance of payments
model with nontraded goods is examined under the
fixed and flexible exchange rates. The fifth chapter summarizes
the previous chapters and gives some conclusions.

This thesis examines the relationship between fiscal policy
and monetary policy and the rate of inflation for the U.S.
using annual data 1955 to 1979.
A survey of macroeconomic theory of inflation is presented.
The rate of inflation is shown to be dependent
upon the rate of monetary and fiscal stimulus in the economy.
A long run monetary growth model of the neoclassical
type is examined which shows the relationship between inflation
and economic stimulus to be very complex. An
empirical examination was done to examine the effects of
monetary policy, fiscal policy and productivity on the rate
of inflation.

This thesis focuses on the futures market for GNMA pass-through
certificates and Treasury bills. The main topic
covered was the speculative strategy of spread-trading. The
period from January 1976 through December 1977 was analyzed to
ascertain whether spread-trade opportunities did exist. The
results of the analysis did support the proposition that prof
i table spread-trade opportunities were possible during the
time studied. Contrary to conventional wisom, the profitability
of spread-trading was found to be heavily dependent on the
correct assessment by the speculator of the direction of movement
of interest rates.

This thesis explored the impact of inflation upon fiscal automatic
stabilizers during the 1973-75 recession. Our study confined itself to
the three main devices purported to stabilize the U.S. economy automatically:
(1) federal personal income tax liability, (2) corporate
profits tax liability, and (3) unemployment compensation benefits.
A recursive model, similar to that used by Dusenberry, Eckstein, and
Fromm to study fiscal automatic stabilizers in the 1957-58 recession,
was constructed. Our simulation results led us to conclude that there
was a substantial reduction in output and employment due to the impact
of inflation upon federal personal income tax liability in the 1973-75
recession. We reached a tentative conclusion that the effects of
inflation upon output and employment via corporate profits tax liability
were negligible. Finally, we concluded that the effects of inflation
upon output and employment via unemployment compensation benefits paid
were negligible in the recent stagflation.

This thesis tests the transmission mechanism through
which changes in the rate of growth of the money
supply affect changes in output and prices. Cross-spectral
analysis was used to test the transmission
mechanism. The results support a neo-keynesian
transmission mechanism which associates changes in
the money supply with changes in investment.

The desire to render college curricula and college teaching more
effective has resulted in ever increasing debates about content
and method of instruction of the Economic Principles Course. The
purpose of this thesis is to examine the behavioral approach to
the subject matter of a one quarter macro-principles course. In
addition to the question of method the problematical aspects of
content and purpose are also examined. The question of what to
teach and to whom to teach it has not been resolved and an attempt
is made in this thesis to provide a rationale for the development
of a substantive content which would provide the student with means
to make relatable interpretive use of the knowledge gained.