Market-dependent Production Set
AbstractA country’s production possibility frontier or PPF is defined as the boundary of its economy’s production set in the net output space for a given technology and fixed quantities of primary factors of production. In general equilibrium theory, exogenous changes in technology or primary-factor supplies alter equilibrium prices; however, government-policy induced domestic relative commodity price changes do not alter the shape of an economy’s production set. We show that, under international capital mobility, which is empirically significant, the shape of a country’s production set does, in fact, depend on market forces and this shape can be manipulated by government policy.
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Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201145.
Length: 17 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming in
general equilibrium; production possibility frontier; production set; international capital mobility; economic policy;
Other versions of this item:
- A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-07 (All new papers)
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