Based on two papers written by Professor Ho, to some extent (I haven't totally understood his detailed analysis and modeling on stabilized WCU modeling yet) I do agree with his insightful discussion on the possibility of establishing WCU as the accumulative and measurable reference to anaylize the overall path of global monetary flows. This research is vitally important to explain certain questions concerning the diversified currencies and their possible nature of accountability, instead, as far as I understood, establishing the literal WCU to replace the existing currencies. I think Professor Ho's paper raised an important question or hypothesis for us all: instead of concerning the diversified currencies in the world, the framework of measurable reference can bring us a new look on the divergence and convergence of monetary flows among countries, currencies exchanges cross borders, the evaluation of domestic real purchasing power, nominal value or real GDP for PPC, real exchange rates etc. In all, enlightened by his distinguishable proposal on the accountability of monetary referencing framework, future studies have the opportunities to torch the light on dynamic factors driven global monetary system's integration, no matter they are theoretically correct or dedicated to pragmatic manner.
Some people's comments are trying too hard to throw their immediate understanding or impressions about the "revolutionary" topic, which sound quite naive or without the spirit of criticism. "counter-revolution" of theoretical hypothesis are crucial to academic studies, it is also the very enlightenment all of us needed in our life-long journey of pursuing knowledge and truth.
I would like to discuss my thoughts as the following five:
1. Dynamic modeling of the overall framework. The accumulative model Professor Ho provided as based on the statistical surveys (which are relative short-term) to indicate the trends and nature of current monetary overall value (as Hong Kong and mainland), hence the sustainability and feasibility of predication and duplication of long-term inflation or devaluation could be a foreseeable matter remain challenged by other equivalent theories or testified by following years data. The time vector function could elaborate within the existing model, and, the establishment of cross-time variables is the very merit of the overall stability of this research.
2. The Stability of Value system - Political Economy Dominion. The institutional arrangements of exchange rates as well as value redistribution analysis in 4th part concerned "what constitute the Right exchange Rate", I believe this part is the most important issue to deal with uneven value of gross production for both regions. Path Dependency is successive monetary studies indicated that the interactions among currencies are not simply among the consumption power or real exchange rates by targeted currency (US dollars for instance, many developing countries used to have the tagged monetary system to against "Gold Standard" or US exchange rates). Actually, HOW TO indicate currency exchange flows by cross-time string vector is instable or lack of studied (maybe there are abundant researches on this topic, I haven't read much about them), hence, I think it is extremely difficult to establish a well recognized and unified interactive model on ideal monetary unification models. On the other hand, many great economists have thrown some lights on deriving factors of monetary analysis; I need read more works to reach my conclusion.
3. Limitations of Growth. As previously discussed, Professor and his commentators had the crossfire on the general base of production value, which as I understood, could be a very difficult dilemma to continue. As the past 50 years global economic growth, the gross production value literally has increased dramatically within NICs, BRICs, OCEDs, even the undeveloped countries listed by United Nations during the new millennium. Hence, successive literature on the global economic growth and gross value production increase has indicated the general trends of growth while the edge/limitations of growth are still unclear. Especially neoclassical endogenous growth model advocated by Romer and other economists stressed the uncertainty of technical innovation which are theoretically existing while hard to measure in real applications. Suppose the general basin or basket of gross value in A domestic region is settled or timely static, the exchange rates are much easier to simulate by current monetary models. The problem is involving two factors: (1) the statistic reliability of the "basket of gross value" (2) the dynamic factors driven economy growth. Information economy advocated by Stigliz and others had proven that information as well as technology innovation has great impact of endogenous economic growth; on the other hand, there are great disputes on the existence of ONE unified measurable model on above hypothesis, which also happened to institutional analysis.
4. Non-equilibrium Analysis and Pareto-optimal distribution of value/price/currency. As previously discussed, the domestic clearing price and value are accordingly varied in regions. The mainland economic structure as well as regional disparities could be reasoned by many excuses. Hysteresis on economic circles and development, surplus labor market, Nonperforming banking loans, inefficient banking system, lack of national financial alerting system, inefficient governance in different levels of government, dependent SOEs and heavy industries characterized in northeast and northwest China, lack of modern management training for most indigenous entrepreneur who have little knowledge upon currency index and the information beneath those figures. Back to the equilibrium analysis, accumulative equilibrium analysis recently has been applied in most economists' research are based on the statistic yearbook which there are already successive dispute on the credibility and reliability of statisitical accountability. Since Friedman (2002) argued that China's statistic data (since 1996-2002) indicated surprising malfunction with natural resources and energy consumption, the overall GDP growth rate as well as the equilibrium price for the nominal or real value of purchasing index are highly doubtful. Suppose the optimal resource allocation is theoretically correct in Hong Kong, while the Pareto efficiency could not explicitly implemented or testified in mainland. Institutional arrangements aruged the fact that socialism market economy has a paradoxical market function nothing but neoclassical doctrines. Hereby, allow me to quote Professor Ho's words:"From the equilibrium condition GDP = C + I + G + X- M, we can write Yd +T-B (disposable income plus net taxes minus government interest payment) = C + I + G + X- M. This transposes to T-G-B = I-S-(M-X). Thus the intersection of GS(≡T-G-B, public sector savings) with PD (≡I-S-(M-X) , private sector savings deficiency) determines equilibrium aggregate demand." Hence, Professor Ho drew the geometrical aberration advocating that aggregation of demand curve could be achieved at the full employment output simultaneously achieving fiscal budget balance. To prove above, Professor continued his modeling analysis by enforcing the full employment dynamic factor with deductive functions, which are convincing and impressive. This is the very merit to me, actually I do love this part, allow me to quote "A currency regime, in order to be sustainable(Bulir and Smidkova, 2004) and thus credible, needs to be adaptable and be compatible with full employment. If the currency regime produces an exchange rate that is not compatible with full employment and has no effective mechanism to adapt towards such a rate it cannot be sustainable and thus cannot be credible. In contrast, the system herein proposed, by allowing a to change as needed, is compatible with full employment and is therefore sustainable and credible." Professor Ho deliberately delivered the corellatin between currency regime and full employment, which is a simpler form of equilibrium price for other researchers to refer to, personally I think this is very important.
5. Safenet or Firewall for currency crisis? Who has a final say? Refer to previously discussed note 1 and 2, floating interesting rates among governments are varied according to domestic consumption power, foreign currency reservation as well as international trade volume, etc. People's Bank of China as the central bank, applied a "basket" combination for trade credit, bank credit, government, consumer, lease and international credit to leverage the overall discount rate on RMB's credit against US dollars. Especially in recent years, China government and central bank encountered great pressure from G7 or G8 on the government-led RMB devaluation, which the preferential interest rate favor to domestic industries and banks are prohibited by global open market indoctrination. The entry of WTO as well as other multilateral financial organizations enforced China financial system integrated to global "basket" gradually regardless China central government's will, hence, Professor Ho's ideal proposal is positive and optimistic in the coming decades. Unlike the promising global political economic environment, the final say eventually goes to the central government of mainland and, even to certain extent, regardless the will of Hong Kong. Observing from previous Asian financial crisis, governments and market have always some agreements or institutional interest arrangements on the distribution of value among countries and regions. Some, inevitably will be experiencing lose one way, and in another way, they gain their compensation or payoff politically or domestically supports by "black box" agreements. No political adjustments come from thin air, while, in most cases, the game theory also applies within their equilibrial resolutions.
Please allow my naive notes...actually, I am not professional to your sphere at all...
All friends, if you have any critism, please feel free to contact me: neotaoism@yahoo.com.cn
I have to confess that I didn't read enough papers of Professor Ho's works, hence, I do owe an apology to Professor Ho and my rush comments. The more I red about his papers, the more I realized that my words previously commentated were groundlessly rooted on personal construction of ideological perceptions with economics. A fair and intellectual comment is deserved here, I will try.
Actually, I think the above five notes are, literally the very thoughts I derived or stimulated from Professor Ho's first two papers, and then, gradually inspired me to continue my endless words by reading others papers of his. Thank you.
[此贴子已经被作者于2006-10-30 0:08:50编辑过]
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