The Macroeconomic Effects of Positive Trend Inflation in a Small Open Economy

2022 ◽  
pp. 1-15
Author(s):  
Yusuf Ömür Yılmaz ◽  
Gul Ipek Tunc
Keyword(s):  
Open Economy ◽  
Small Open Economy ◽  
Positive Trend ◽  
Trend Inflation ◽  
Macroeconomic Effects

scholarly journals COVID-19 and Emerging Markets

2020 ◽  
Vol 20 (133) ◽  
Author(s):  
Cem Cakmakli ◽  
Selva Demiralp ◽  
Sebnem Kalemli-Ozcan ◽  
Sevcan Yesiltas ◽  
Muhammed Yildirim
Keyword(s):  
Open Economy ◽  
Credit Card ◽  
Small Open Economy ◽  
Input Output ◽  
Economic Costs ◽  
Infection Rates ◽  
Demand Shock ◽  
Supply Shocks ◽  
Initial Shock ◽  
Macroeconomic Effects

We quantify the macroeconomic effects of COVID-19 for a small open economy by calibrating a SIR-multi-sector-macro model. We measure sectoral supply shocks utilizing teleworking and physical job proximity, and demand shocks with credit card purchases. Both shocks are also affected from changing infection rates under different lockdown scenarios. Being an open economy amplifies the economic costs through two main channels. First, the demand shock has domestic and external components. Second, the initial shock is magnified due to domestic and international input-output linkages.

scholarly journals Macroeconomic effects of unemployment benefits in small open economies: a stock–flow consistent approach

2018 ◽  
Vol 15 (3) ◽  
pp. 335-363
Author(s):  
Byrialsen Mikael Randrup ◽  
Hamid Raza
Keyword(s):  
Open Economy ◽  
Aggregate Demand ◽  
Small Open Economy ◽  
Unemployment Benefits ◽  
Trade Off ◽  
Unemployment Compensation ◽  
Key Variables ◽  
Macroeconomic Effects ◽  
Stock Flow ◽  
Compensation Rate

This paper attempts to analyse the macroeconomic effects of unemployment benefits in a small open economy. We adopt a stock–flow consistent (SFC) approach with an emphasis on the dynamics of the labour market. We numerically solve the model using a combination of estimation and calibration to generate statistics for our key variables, reflecting features of the Danish economy. We then analyse the effects of a fall in the unemployment compensation rate on the economy. The results indicate that a fall in the compensation rate at a macro level leads to a trade-off between a fall in aggregate demand and a rise in net exports. Due to this trade-off, the net effect of a fall in the compensation rate on the aggregate unemployment rate tends to be weak. Our analyses in this paper raise several questions on the existing views regarding unemployment benefits adopted by a large strand of the economic literature.

scholarly journals The Macroeconomic Effects of a Productivity Shock in the Nontraded Goods Sector

Ekonomika ◽  
2007 ◽  
Vol 77 ◽  
Author(s):  
Juha Tervala
Keyword(s):  
Open Economy ◽  
Small Open Economy ◽  
Productivity Shocks ◽  
Interesting Insight ◽  
Nontraded Goods ◽  
Productivity Shock ◽  
Negative Effect ◽  
Short Run ◽  
Macroeconomic Effects ◽  
Rbc Models

This paper analyses the macroeconomic effects of a productivity shock in the nontraded goods sector using a small open economy model. The paper develops a simple dynamic general equilibrium model offering intuitive explanations of how a productivity shock affects a small open economy. The model gives a surprisingly pessimistic view on the benefits of productivity shocks. For example, a productivity shock has, except for one special case, a negative effect on the output of nontraded goods in the short run. This result differs from the results of RBC models. The paper gives an interesting insight into the possible effects that the introduction of the EU (European Union) services directive or GATS (General Agreement on Trade in Services) agreement may have.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

Sign in / Sign up

Export Citation Format

Share Document