Terms of trade, economic growth, and trade patterns: a small open-economy case

2000 ◽  
Vol 52 (1) ◽  
pp. 169-181 ◽  
Author(s):  
Akihiko Kaneko
Keyword(s):  
Economic Growth ◽  
Open Economy ◽  
Small Open Economy ◽  
Terms Of Trade ◽  
Trade Patterns

scholarly journals A small open economic growth model with imported goods, tourism, and terms of trade

2018 ◽  
pp. 65-86
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Economic Growth ◽  
Dynamic Analysis ◽  
Growth Model ◽  
Open Economy ◽  
Service Sector ◽  
Small Open Economy ◽  
Terms Of Trade ◽  
Nonlinear Dynamic Model ◽  
Economic Growth Model ◽  
Tourism Economy

This paper constructs an economic growth model of a small open economy with tourism and imported goods in a perfectly competitive economy. The study focuses on the effects of changes in terms of trade, with a preference for imported goods, on the dynamic paths of trade balance and economic growth. The basic framework for modelling a national economy is based on the Solow-Uzawa neoclassical growth model with Zhang’s alternative approach to household behaviour. We build a nonlinear dynamic model with interdependence between economic growth, economic structure, tourism, prices, wealth and income. We provide a computational process to follow the motion of the economic system. Simulation is used to carry out a comparative dynamic analysis of the terms of trade, the propensity to consume imported goods, the rate of interest, the price elasticity of tourism, and the total productivity of the service sector. The comparative dynamic analysis provides some insights into the complexity of the tourism economy.

Interest Rate–Economic Growth Nexus Under Currency Board Operations

2021 ◽  
Vol 8 (1) ◽  
pp. 13-24
Author(s):  
Martinianus Tshimologo Tibinyane ◽  
Teresia Kaulihowa
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Impulse Response ◽  
Response Function ◽  
Open Economy ◽  
Small Open Economy ◽  
Impulse Response Function ◽  
Policy Instrument ◽  
Variance Decomposition ◽  
Currency Board

This paper analyses the effect of the prime interest rate as a monetary policy instrument to stimulate economic growth in Namibia, a small open economy that is constrained by currency board operations. A Vector Autoregressive Model (VAR) was used for the period 1980–2019. The result shows that Namibia’s prime interest rate has no significant effect on economic growth. This finding remains robust and consistent when impulse response function and variance decomposition are employed. The impulse response function indicates a shock on the prime interest rate exhibits an inverse relationship. However, this effect is insignificant in both short and long-run scenarios. The variance decomposition indicates that the prime interest rate has a strongly exogenous impact, implying it has a weak influence on GDP growth. Policy implication indicates that small open economies under currency board operations need to identify different policy responses to circumvent external shocks and addresses their development needs.

scholarly journals Does Meaningful Relationship Exist Between Trade Liberalization and Economic Growth? A Case Study of a Small Open Economy

2021 ◽  
pp. 63-79
Author(s):  
Adedapo Odebode ◽  
Olajide Sunday Oladipo
Keyword(s):  
Economic Growth ◽  
Trade Liberalization ◽  
Open Economy ◽  
Trade Openness ◽  
Small Open Economy ◽  
Jel Classification ◽  
Appropriate Technology ◽  
Vector Error Correction ◽  
Meaningful Relationship ◽  
Alternative Measures

Using quarterly data between 1981q1 and 2018q4, the paper investigates the relationship between trade liberalization and economic growth in Nigeria. Exploring Johnasen cointegration technique and the Vector Error Correction (VEC) method, the paper considers three alternative measures of trade liberalization to determine whether the response of economic growth to trade liberalization is sensitive to the choice of the indicators of trade liberalization under consideration. The paper finds significant effects of trade liberalization on the economy. The paper recommends that government should implement policies that will promote trade openness in Nigeria. This may be achieved by establishing bilateral and multi-lateral agreements that are favourable and that will support appropriate technology transfer to domestic producers. JEL classification numbers: F31, F13, F41. Keywords: Trade liberalization, Tariffs, Economic growth, Nigeria.

Risk Aversion and Unemployment in an Open Economy

2000 ◽  
Vol 49 (2) ◽  
Author(s):  
Pia Weiß
Keyword(s):  
Risk Aversion ◽  
Open Economy ◽  
Small Open Economy ◽  
Risk Behaviour ◽  
Terms Of Trade ◽  
Individual Risk ◽  
Risk Averse ◽  
Search Frictions ◽  
Long Run ◽  
The Impact

AbstractThe paper analyses the impact which risk aversion has on a small open economy characterised by search frictions on the labour market. It is shown that the long-run qualitative effects caused by a terms-of-trade shock are independent of individual risk behaviour. As far as quantitative aspects are concerned risk aversion always leads to higher equilibrium employment; however the increase in unemployment due to a price shock is the higher the more risk-averse individuals are.

Recent Economic Trends in Sri Lanka

1983 ◽  
Vol 14 (2) ◽  
pp. 262-265 ◽  
Author(s):  
Richard Hooley
Keyword(s):  
Economic Growth ◽  
Sri Lanka ◽  
Open Economy ◽  
Economic Performance ◽  
Small Open Economy ◽  
Economic Structure ◽  
Asian Countries ◽  
The Past ◽  
Economic Trends ◽  
Southeast Asian Countries

While Sri Lanka is geographically closer to India, there are greater similarities in economic structure with many Southeast Asian countries. Sri Lanka is a small open economy. Foreign trade has always played a pivotal role in the functioning of the economy. Politically the country has exhibited a preference for democratic parliamentary forms of government, which are compatible with an underlying cultural individualism. There are important differences, however, in both the tempo and direction of economic growth over the past two decades, and these differences, along with the underlying policy strategies that produced them, are potentially instructive in any consideration of economic performance in the region.

scholarly journals Economic Growth and Inequality with Tourism in an Integrated Walrasian-General Equilibrium and Neoclassical-Growth Theory

2018 ◽  
Vol 21 (1) ◽  
pp. 17-36
Author(s):  
Wei-Bin Zhang
Keyword(s):  
Economic Growth ◽  
General Equilibrium ◽  
Open Economy ◽  
Nonlinear Differential Equations ◽  
Small Open Economy ◽  
Growth Theory ◽  
Traded Goods ◽  
The Rich ◽  
Neoclassical Growth Theory ◽  
Neoclassical Growth

Abstract This paper studies dynamic interdependence between economic growth, tourism, and inequalities in income and wealth in a small open economy. We build the dynamic model in an integrated Walrasian-general equilibrium and neoclassical-growth theory for a small open economy with multiple sectors and heterogeneous households in a perfectly competitive economy. The economy consists of one service sector which supplies non-traded services and one industrial sector which produces traded goods. We treat wealth accumulation and land distribution between housing and supply of services as endogenous variables. We show that the motion of the economy with J types of households is given by J nonlinear differential equations. We simulate the motion of the system with three groups of households. We also conduct comparative dynamic analysis with regards to the rate of interest, the price elasticity of tourism, the global economic condition, and the rich class’ human capital, and the rich class’ propensity to consume housing.

Sign in / Sign up

Export Citation Format

Share Document