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Balance of payments and determinacy

Author

Listed:
  • POLEMARCHAKIS, Heracles

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

  • SALTO, Matteo

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

In economies of overlapping generations, competitive equilibrium allocations and interest rates may be indeterminate. In a world economy with multiple countries, a competitive equilibrium need not satisfy the condition that the balance of payments be in equilibrium. In a stationary economy with heterogeneous countries, the requirement that, in addition to market clearing, a balance of payments equilibrium condition be satisfied restores the determinacy of equilibrium; and it may select the monetary steady - state equilibrium.

Suggested Citation

  • POLEMARCHAKIS, Heracles & SALTO, Matteo, 1995. "Balance of payments and determinacy," LIDAM Discussion Papers CORE 1995084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1995084
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1995.html
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    More about this item

    Keywords

    balance of payments; determinacy of competitive equilibrium;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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