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Intermediate Inputs and International Trade: An Analysis of the Real and Monetary Aspects of an Oil Price Shock

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  • Djajic, Slobodan

Abstract

This paper analyses the real and monetary effects of an increase in the price of a traded intermediate input. On the production side, the model differs from other work on the subject in that our economy produces the intermediate input and also traded and non-traded final goods. On the asset side, titles representing ownership of the specific factor which is used in the production of the intermediate input, are explicitly introduced into portfolios. The analysis mainly focuses on the effects of an increase in the price of the intermediate input on the distribution of income, relative prices, production levels, the balance of trade and the level of, as well as the rates of change in, nominal prices and the exchange rate.

Suggested Citation

  • Djajic, Slobodan, 1980. "Intermediate Inputs and International Trade: An Analysis of the Real and Monetary Aspects of an Oil Price Shock," Queen's Institute for Economic Research Discussion Papers 275164, Queen's University - Department of Economics.
    • Handle: RePEc:ags:queddp:275164
    DOI: 10.22004/ag.econ.275164
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    References listed on IDEAS

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    1. repec:bla:scandj:v:78:y:1976:i:2:p:280-304 is not listed on IDEAS
    2. William M. Scarth, 1979. "Real Disturbances, Perfect Capital Mobility, and Exchange Rate Policy," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 93-100, February.
    3. Ronald E. Findlay & Carlos Alfredo Rodriguez, 1977. "Intermediate Imports and Macroeconomic Policy under Flexible Exchange Rates," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 208-217, May.
    4. Calvo, Guillermo A & Rodriguez, Carlos Alfredo, 1977. "A Model of Exchange Rate Determination under Currency Substitution and Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 617-625, June.
    5. Schmid, Michael, 1976. "A model of trade in money, goods and factors," Journal of International Economics, Elsevier, vol. 6(4), pages 347-361, November.
    6. repec:bla:econom:v:45:y:1978:i:179:p:251-72 is not listed on IDEAS
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