英文關鍵字：
currency substitution;trade elasticity;exchange rate dynamics;monetary independence;(in)determinacy
摘要：
This paper constructs a three-currency generalized macroeconomic model to analyze the effects of domestic monetary expansion on the macroeconomic economy in a small open system. The dynamic general equilibrium model shows that whether these foreign currencies are complementary or substitutable with the domestic currency plays an important role in assessing monetary independence and real exchange rate dynamics. The magnitude of trade elasticities also crucially affects the dynamic consequences of exchange rates under currency substitution. When the modified Marshall-Lerner condition holds, the exchange rate adjustment exhibits an unique saddle path. However, if the modified Marshall-Lerner condition does not hold, the exchange rate adjustment may be either unstable or indeterminate.
