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A Mathematical Model of an Open Economy with Applications in Romania

Author

Listed:
  • Catalin Angelo Ioan

    (Danubius University of Galati)

  • Gina Ioan

    (Danubius University of Galati)

Abstract

In this paper, we first study the static equilibrium of a a closed economy model in terms of dependence on national income and interest rate from the main factors namely the marginal propensity to consume, tax rate, investment rate and the rate of currency demand. In the second part, we study the dynamic equilibrium solutions in terms of stability. We thus obtain the variation functions of national income and interest rate variation and their limit values. Finally, we propose two scenarios of economic development of Romania.

Suggested Citation

  • Catalin Angelo Ioan & Gina Ioan, 2013. "A Mathematical Model of an Open Economy with Applications in Romania," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 9(5), pages 103-170, October.
    • Handle: RePEc:dug:actaec:y:2013:i:5:p:103-170
    as

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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/1853/1908
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    References listed on IDEAS

    as
    1. Philip A. Lawn, 2003. "Environmental Macroeconomics: Extending the IS–LM Model to Include an ‘Environmental Equilibrium’ Curve," Australian Economic Papers, Wiley Blackwell, vol. 42(1), pages 118-134, March.
    2. Justiniano, Alejandro & Preston, Bruce, 2010. "Can structural small open-economy models account for the influence of foreign disturbances?," Journal of International Economics, Elsevier, vol. 81(1), pages 61-74, May.
    3. Paul R. Bergin, 2017. "How Well Can the New Open Economy Macroeconomics Explain the Exchange Rate and Current Account?," World Scientific Book Chapters, in: International Macroeconomic Interdependence, chapter 5, pages 117-152, World Scientific Publishing Co. Pte. Ltd..
    4. F. H. Hahn, 1977. "Keynesian Economics and General Equilibrium Theory: Reflections on Some Current Debates," International Economic Association Series, in: G. C. Harcourt (ed.), The Microeconomic Foundations of Macroeconomics, chapter 1, pages 25-40, Palgrave Macmillan.
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    Keywords

    equilibrium; demand; income;
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