Economic fluctuations in a smalleconomy with two productive sectorsunder a floating exchange rate regime

Ecos de Economía: A Latin American Journal of Applied Economics

José Ustorgio Mora Mora¹ 

[1]Instituto de Investigaciones Económicas y Sociales. Universidad de Los Andes, Venezuela

关键词: Business cycles;    Fiscal policy;    Monetary policy;    Exchange rate policy;   

DOI  :  

学科分类：社会科学、人文和艺术（综合）

来源: Universidad Eafit

【 摘 要 】

This paper presents a theoretical model of aggregate supply and demand in a small economy with two productive sectors, under a flexible exchange regime and imperfect capital mobility. Only one of the production sectors is assumed to produce an exportable commodity sold at world market prices, while the production of the other sector is assumed to supply the domestic market. This model helps to explain how the impact of both domestic (economic policy, productivity, etc.) and foreign (changes in exchange terms) shocks is spread. In every case studied, results show that real output increases consistently with those cases postulated by economic theory. Conversely, the effects on the price level, the exchange rate and the real interest rate are ambiguous. In terms of domestic shocks, fiscal or monetary policy may be seen as a way to stabilize or stimulate the economy but the costs involved raise the price level .

【 授权许可】

Unknown