Economics Stack Exchange
Economics Stack Exchange

Questions tagged [open-economy-macro]

84 questions
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Stiglitz: movement capital vs labor, effect on living standars

Stiglitz argues that increasing free movement of labor would be a much more effective way of increasing living standards, compared to free movement of capital (see for instance this video). Does someone know which theoretical frameworks have been…
desval
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Fiscal policy in the Dornbusch model

I'm studying the Dornbusch overshooting model of the exchange rate. Specifically, I'm studying the model presented in a textbook by Copeland (2014). The economy is represented by the following equations: $y^d=h(e-p)$ $m_s-p=k\bar{y}-lr$ $\Delta p…
Chaerephon
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When companies export do they receive the foreign currency or their domestic currency? (net capital outflows)

In Mankiw "Economics" (Fourth edition) it states when a company exports (UK BP Oil to Japan): Two things have occured the UK has sold to a foreigner some of its output in the goods market (the oil).....In addition the UK has acquired some foreign…
Studi
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When a country purchases foreign assets, does it change the Net Capital Outflow?

When a country purchases foreign assets, does it change the Net Capital Outflow? This was a discussion question in my class, and a lot ended up answering that NCO increases, but I'm not so sure. Because when you look at the definition of Net Capital…
Robin311
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Can the current account go into deficit with zero capital mobility?

So, can it? The supposition is that this has been caused by an increase in domestic residents' marginal propensity to import. My thought would have been: no, it cannot, but my answer seems too simple for me to believe it (it forms part of an…
Chaerephon
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Small Open Economy

In a small open economy, the interest rate is exogenous: The world interest rate. The domestic interest rate can fluctuate momentarily, but because of complete freedom of international flow of funds, it comes back to the world rate. The nominal…
Ibrahimsahinkaya
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