11-03-08-The Complete Model Of An Open Economy

11-03-08-The Complete Model Of An Open Economy - Model Of...

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Model Of An Open Economy, Including Financial Markets March 8, 2011
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The Complete Model STIG = -250·(w – p) + .2·Y –G c0 –G f0 +1000·r +1690 CA = 750·(e + p f + τ – p) - .3·Y – G f0 +X 0 + 790 STIG = CA m d = m s m d = p + m d 0 + .001·Y – 2.5·r (1-d)·(m s – m s T ) = -d·(e – e T )
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Values Of Exogenous Variables w = 8 (In The Short And Intermediate Run); p = 1 (In The Short Run); Y = 1000 (In Intermediate And Long Run); G c0 = 160; G f0 = 40; r = .06 CA = 0 (In The Long Run); b = 750; p f = 0; τ = 0 (Free Trade); X 0 = 0 m d 0 = 3.15; m s T = 5; e T = .4
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Exchange Rate Regimes Value of d Name of Regime Characteristic of Regime d = 0 Flexible Exchange Rates m s = m s T 0<d<1 Managed Exchange Rates When m s <m s T , then e>e T . When m s >m s T , then e<e T . d =1 Fixed (Pegged- But-Adjustable) Exchange Rates e = e T
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Variables Measured As Natural Logs Name Of Variable Notation As Level Value As Level Notation As Log Value As Natural Log
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11-03-08-The Complete Model Of An Open Economy - Model Of...

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