IDEAS home Printed from https://ideas.repec.org/a/abd/kauiea/v5y1993i1no1p3-23.html
   My bibliography  Save this article

Equilibrium in a Non-Interest Open Economy التوازن في اقتصاد مفتوح خال من الربا

Author

Listed:
  • ABBAS MIRAKHOR

    (Research Department, International Monetary Fund)

Abstract

This paper analyzes an economy in which there are no interest-bearing assets, only equity shares. Equilibrium conditions are derived for the case of a closed economy, an open economy with trade in goods only, and finally one with trade in both goods and equity shares. It is shown that the rate of return to capital equilibrates savings and investment, that the differential between the domestic and foreign rates of return to equity determines the direction of capital flows, and that under a fixed exchange rate system, adjustments induced by exchange rate changes are channeled through the asset accounts. في هذا البحث تحليل لاقتصاد لا توجد فيه أصول ربوية بل فيه فقط أسهم ملكية. واستنبطنا في البحث الشروط اللازمة للتوازن بالنسبة لاقتصاد مغلق ، ثم بالنسبة لاقتصاد مفتوح للتجارة الخارجية في السلع فقط . وأخيراً بالنسبة لاقتصاد مفتوح للتجارة الخارجية في السلع والأسهم معا . ويظهر أن عائد رأس المال هو الذي يحقق التوازن بين الادخار والاستثمار وأن الفرق بين العائد الداخلي والعائد الخارجي للأسهم هو الذي يوجه حركة رؤوس الأموال. كما يظهر أنه في ظل نظام أسعار صرف ثابتة، فإن التعديلات الناشئة عن تغير سعر الصرف الخارجي تعمل من خلال حسابات الأصول.

Suggested Citation

  • Abbas Mirakhor, 1993. "Equilibrium in a Non-Interest Open Economy التوازن في اقتصاد مفتوح خال من الربا," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 5(1), pages 3-23, January.
    • Handle: RePEc:abd:kauiea:v:5:y:1993:i:1:no:1:p:3-23
    DOI: 10.4197/islec.5-1.1
    as

    Download full text from publisher

    File URL: https://iei.kau.edu.sa/Files/121/Files/153898_05-01-AbbMirakhor.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.4197/islec.5-1.1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Shane, Mathew, 1974. "Capital Markets and the Dynamics of Growth," American Economic Review, American Economic Association, vol. 64(1), pages 162-169, March.
    2. Robert A. Mundell, 1960. "The Public Debt, Corporate Income Taxes, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 68, pages 622-622.
    3. Epstein, Larry G & Hynes, J Allan, 1983. "The Rate of Time Preference and Dynamic Economic Analysis," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 611-635, August.
    4. J. A. Frenkel & S. Fischer, 1972. "International Capital Movements Along Balanced Growth Paths:Comments and Extensions," The Economic Record, The Economic Society of Australia, vol. 48(2), pages 266-271, June.
    5. Peter Montiel, 1986. "An Optimizing Model of Household Behavior under Credit Rationing (Un modèle d'optimisation du comportement des ménages dans une situation de rationnement du crédit) (Modelo de optimización del com," IMF Staff Papers, Palgrave Macmillan, vol. 33(3), pages 583-615, September.
    6. A. B. Treadway, 1969. "On Rational Entrepreneurial Behaviour and the Demand for Investment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(2), pages 227-239.
    7. Fischer, Stanley & Frenkel, Jacob A., 1972. "Investment, the two-sector model and trade in debt and capital goods," Journal of International Economics, Elsevier, vol. 2(3), pages 211-233, August.
    8. Mirakhor, Abbas & Zaidi, Iqbal, 1988. "Stabilization and Growth in an Open Islamic Economy," MPRA Paper 56003, University Library of Munich, Germany.
    9. Olson, Mancur & Bailey, Martin J, 1981. "Positive Time Preference," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 1-25, February.
    10. Frenkel, Jacob A & Fischer, Stanley, 1972. "International Capital Movements Along Balanced Growth Paths: Comments and Extensions," The Economic Record, The Economic Society of Australia, vol. 48(122), pages 266-271, June.
    11. S. I. Taj El-Din, 1985. "Towards an Islamic Model of Stock Market نحو نموذج إسلامي لسوق الأسهم," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 3(1), pages 61-87, January.
    12. Uzawa, H, 1969. "Time Preference and the Penrose Effect in a Two-Class Model of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 77(4), pages 628-652, Part II, .
    13. Cole, Harold, 1988. "Financial Structure and International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(2), pages 237-259, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Al-Jarhi, Mabid Ali M. M., 2016. "An Economic Theory of Islamic Finance Regulation," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 24, pages 1-44.
    2. Hossein Askari & Noureddine Krichene & Abbas Mirakhor, 2014. "On the Stability of an Islamic Financial System," PSL Quarterly Review, Economia civile, vol. 67(269), pages 131-167.
    3. Mirakhor, Abbas, 2009. "Islamic Economics and Finance: An Institutional Perspective," MPRA Paper 56017, University Library of Munich, Germany.
    4. Mirakhor, Abbas, 2012. "Islamic Finance, Risk Sharing and Macroeconomic Policies," MPRA Paper 56338, University Library of Munich, Germany.
    5. Hossein Askari & Noureddine Krichene, 2014. "Islamic finance: an alternative financial system for stability, equity, and growth," PSL Quarterly Review, Economia civile, vol. 67(268), pages 9-54.
    6. Hossein Askari & Abbas Mirakhor, 2014. "Risk sharing, public policy and the contribution of Islamic finance," PSL Quarterly Review, Economia civile, vol. 67(271), pages 345-379.
    7. Mirakhor, Abbas & Krichene, Noureddine, 2009. "The Recent Crisis: Lessons for Islamic Finance," MPRA Paper 56022, University Library of Munich, Germany.
    8. Mirakhor, Abbas, 2010. "Whither Islamic Finance? Risk Sharing in An Age of Crises," MPRA Paper 56341, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mirakhor, Abbas, 1993. "Equilibrium in a Non-Interest Open Economy," MPRA Paper 56011, University Library of Munich, Germany.
    2. Leimbach, Marian & Edenhofer, Ottmar, 2005. "Capital mobility and spillovers within a modular approach to multi-region modeling," Conference papers 331342, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Francis, J. & Kompas, T., 1998. "Uzawa's Transformation and Optimal Control Problems With Variable Rates of Time Preference," Papers 354, Australian National University - Department of Economics.
    4. Warwick J. McKibbin & Martin T. Ross & Robert Shackleton & Peter J. Wilcoxen, 1999. "Emissions Trading, Capital Flows and the Kyoto Protocol," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 287-333.
    5. Kuper, Gerard H., 1996. "The effects of energy taxes on productivity and employment: The case of the Netherlands," Resource and Energy Economics, Elsevier, vol. 18(2), pages 137-159, June.
    6. Cui, Xiaoyong & Gong, Liutang & Yang, Jianfang & Zou, Heng-fu, 2008. "Marshallian time preferences and monetary non-neutrality," Economic Modelling, Elsevier, vol. 25(6), pages 1196-1205, November.
    7. Tom Kompas & Omar Abdel-Razeq, 2001. "A Simple Monetary Growth Model with Variable Rates of Time Preference," International and Development Economics Working Papers idec01-10, International and Development Economics.
    8. Stanley Fischer & Jacob A. Frenkel, 1974. "Interest Rate Equalization and Patterns of Production, Trade and Consumption in a Two‐country Growth Model," The Economic Record, The Economic Society of Australia, vol. 50(4), pages 555-580, December.
    9. McKibbin, Warwick J. & Shackleton, Robert & Wilcoxen, Peter J., 1999. "What to expect from an international system of tradable permits for carbon emissions," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 319-346, August.
    10. Lee, Jong-Wha & McKibbin, Warwick J., 2018. "Service sector productivity and economic growth in Asia," Economic Modelling, Elsevier, vol. 74(C), pages 247-263.
    11. M. Ishaq Nadiri & Ingmar Prucha, 2001. "Dynamic Factor Demand Models and Productivity Analysis," NBER Chapters, in: New Developments in Productivity Analysis, pages 103-172, National Bureau of Economic Research, Inc.
    12. Nishimura, Kazuo & Ohyama, Michihiro, 1995. "External debt cycles," Structural Change and Economic Dynamics, Elsevier, vol. 6(2), pages 215-236, June.
    13. McKibbin, Warwick J. & Wilcoxen, Peter J., 2013. "A Global Approach to Energy and the Environment," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 995-1068, Elsevier.
    14. Timothy Kam, 2003. "The Value of Interest-rate Smoothing in a Forward-looking Small Open Economy," Economics Discussion / Working Papers 03-12, The University of Western Australia, Department of Economics.
    15. Meckl, Jürgen, 1989. "Investment and sector-specific capital: A dynamic approach to incomplete factor mobility," Discussion Papers, Series II 95, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    16. David O Lucca, 2007. "Resuscitating Time-to-Build," 2007 Meeting Papers 909, Society for Economic Dynamics.
    17. Warwick J. McKibbin & Robert Shackleton & Peter J. Wilcoxen, 1998. "The Potential Effects of International Carbon Emissions Permit Trading Under the Kyoto Protocol," Economics and Environment Network Working Papers 9805, Australian National University, Economics and Environment Network.
    18. Kemfert, Claudia & Kremers, Hans, 2003. "A Computable General Equilibrium Assessment of a Developing Country Joining an Annex 1 Permit Trading Market," Conference papers 331095, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Demers, Fanny S. & Demers, Michel & Schaller, Huntley, 1994. "Irreversible investment and costs of adjustment," CEPREMAP Working Papers (Couverture Orange) 9416, CEPREMAP.
    20. Pavel Potužák, 2016. "Může být přirozená úroková míra nulová? Neoklasický přístup [Can the Natural Rate of Interest Be Zero? A Neoclassical Approach]," Politická ekonomie, Prague University of Economics and Business, vol. 2016(1), pages 83-108.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abd:kauiea:v:5:y:1993:i:1:no:1:p:3-23. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: King Abdulaziz University, Islamic Economics Institute. (email available below). General contact details of provider: https://edirc.repec.org/data/cikausa.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.