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- W1520289173 abstract "Countries specialize in producing goods that they have comparative advantages in producing. This results in a country exporting some goods while it imports other. Hence, there is a reason to expect that changes in the prices of these goods have considerable economic effect and that demand management can be used to improve welfare following such changes. This paper analyses this using a New Open Economy Macro (NOEM) model of a small open economy. Among others, the results indicate that, in a small open economy, a terms of trade appreciation results in increased consumption, labor use and output on impact while consumption increases but labor use and output decrease in future time periods. The results also indicate that the vulnerability of an economy towards such shocks is negatively related to its size. Finally, the results indicate that there exists a welfare improving demand management policy following a terms of trade shock." @default.
- W1520289173 created "2016-06-24" @default.
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- W1520289173 date "2007-01-01" @default.
- W1520289173 modified "2023-09-23" @default.
- W1520289173 title "Foreign Prices Shocks in a Small Open Economy" @default.
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- W1520289173 doi "https://doi.org/10.2139/ssrn.1141761" @default.
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