Browsing Healthcare Administration by Author "Kelly, Mary H."
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- ItemMonetary Policy Convergence in the NAFTA Region: Evidence from Cointegration Analysis and Contagion Effects(2013) Lizardo, Radhames; Kelly, Mary H.This paper examines the evolving, time-variant, long-run equilibrium relationship among the target interbank interest rates of Canada, the United States and Mexico to assess whether or not monetary policy in the NAFTA region is truly converging, as suggested by the leaders of these countries at a recent meeting in Montebello, Canada. Only recently has is it become feasible to analyze monetary convergence in the NAFTA region, as rolling cointegration analysis requires long-term data, such as that used in this study for the period of 1997 through 2007. We also test for cross-border contagion effects from the financial difficulties faced by Countrywide Financial Corporation during the recent U.S. real estate meltdown. This study of empirical financial and economic phenomena employs multivariate cointegration test and, for robustness, calculates σ-convergence in the NAFTA region. Our findings support the hypothesis of monetary policy convergence in the region. In general, the analysis tends to confirm a broad, ongoing economic convergence in the NAFTA region. We also find support for the proposition of cross border contagion effects from the financial difficulties faced by Countrywide, which adds robustness to the presence of monetary convergence.
- ItemWhat Motivates China to Invest so Heavily in U.S. Treasury Securities?(2014) Lizardo, Radhames; Kelly, Mary H.This paper attempts to shed light on the question: What motivates China to invest so heavily in U.S. Treasury securities, despite the fact that U.S. Treasuries provide real rates of return that are either close to zero or negative? Such an investment strategy can be perceived as economically irrational. A linkage can be presumed between China’s investment practices and the tactical decision to moderate the United States’ influence on economic, political, and military issues. We hypothesize, however, that China does not have a better investment option because holding an ever-increasing amount of U.S. dollar-based liquid assets gives China the ability to manage the value of the yuan in order to force its desired trade surpluses. In other words, China’s main mechanism to secure a positive trade balance and increase its foreign direct investment is by maintaining an undervalued currency, which requires an ever-increasing foreign-exchange reserve. From what we know, our study is the most comprehensive empirical examination of motivations for China’s heavy purchases of U.S. Treasury securities by analyzing nearly 25 years that begins in 1987 and covers the period over which China dramatically increased its holdings of these instruments.