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Technological dependence and budgetary policy in an uncertain horizon model of small open economy

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  • Dai, Meixing

Abstract

It is set up in this paper a formulation which endogeneizes the choice of investment inputs in open economy context where a small country may depend on foreign technology. Then it is integrated into a macroeconomic model of small specialized country with Blanchard-Yaari type uncertain horizon consumers. Contrary to some models with ad hoc formulation, it is found in this model that generally the budgetary policy has eects on the short- and long-run capital stock. The corresponding intertemporal spill-over effects of the budgetary policy, through the supply side of economy on external position, aggregate consumption, real exchange rate and capital evaluation ratio, are also examined.

Suggested Citation

  • Dai, Meixing, 1992. "Technological dependence and budgetary policy in an uncertain horizon model of small open economy," MPRA Paper 14003, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14003
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    File URL: https://mpra.ub.uni-muenchen.de/14348/1/MPRA_paper_14348.pdf
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    References listed on IDEAS

    as
    1. Matsuyama, Kiminori, 1990. "Residential investment and the current account," Journal of International Economics, Elsevier, vol. 28(1-2), pages 137-153, February.
    2. Francesco Giavazzi & Charles Wyplosz, 1984. "The Real Exchange Rate, the Current Account, and the Speed of Adjustment," NBER Chapters,in: Exchange Rate Theory and Practice, pages 335-356 National Bureau of Economic Research, Inc.
    3. Turnovsky, Stephen J & Sen, Partha, 1991. "Fiscal Policy, Capital Accumulation, and Debt in an Open Economy," Oxford Economic Papers, Oxford University Press, vol. 43(1), pages 1-24, January.
    4. Buiter, Willem H, 1984. "Saddlepoint Problems in Continuous Time Rational Expectations Models: A General Method and Some Macroeconomic Examples," Econometrica, Econometric Society, vol. 52(3), pages 665-680, May.
    5. Pitchford, J. D., 1989. "Optimum borrowing and the current account when there are fluctuations in income," Journal of International Economics, Elsevier, vol. 26(3-4), pages 345-358, May.
    6. Matsuyama, Kiminori, 1987. "Current account dynamics in a finite horizon model," Journal of International Economics, Elsevier, vol. 23(3-4), pages 299-313, November.
    7. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-594, June.
    8. Hayashi, Fumio, 1982. "Tobin's Marginal q and Average q: A Neoclassical Interpretation," Econometrica, Econometric Society, vol. 50(1), pages 213-224, January.
    9. van der Ploeg, Frederick, 1991. "Money and Capital in Interdependent Economies with Overlapping Generations," Economica, London School of Economics and Political Science, vol. 58(230), pages 233-256, May.
    10. Weil, Philippe, 1989. "Overlapping families of infinitely-lived agents," Journal of Public Economics, Elsevier, vol. 38(2), pages 183-198, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Technological dependence; choice of investment inputs; capital stock; capital evaluation ratio; real exchange rate and external position;

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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