Favorable External Shocks, Sectoral Adjustment and De-industrialization in Non- Oil Producing Economies
This paper examines the extent to which a favorable external shock such as the lower price of an intermediate input affects sectoral output and employment, the real exchange rate of the wage in an economy where the input has no domestic production at all. The analytical framework is a real, short-run model based on a three-sector, three-factor small open economy. The effect of the shock on the variables concerned depends on the structural characteristics of production and consumption in the economy. In the normal case, the traded sectors initially favored by the shock expand the most among sectors while the other tradeables suffer. The real exchange rate may appreciate along with the upsurge of wages. The shock can produce many other possible cases, however: the nontraded sector may grow at the expense of the traded sectors including the favored sector, thus leading to de-industrialization. An extreme case is that the positive effect on output and employment may occur only at the traded sectors that are initially unfavored by the shock. The shock may bring about real depreciation, or a decline in nominal wages, too.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||01 Jun 1996|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.haas.berkeley.edu/groups/iber/wps/ciderwp.htm
More information through EDIRC
|Order Information:|| Postal: IBER, F502 Haas Building, University of California at Berkeley, Berkeley CA 94720-1922|
When requesting a correction, please mention this item's handle: RePEc:ucb:calbcd:c96-072. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.