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Dynamic Responses to Policy and Exogenous Shocks in an Empirical Developing-Country Model with Rational Expectations
Author:
International Monetary Fund
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Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 025
Language:
English
Publication Date:
01 Mar 1990
DOI:
https://doi.org/10.5089/9781451920741.001
ISBN:
9781451920741
ISSN:
1018-5941
Pages:
54
Keywords:
WP; capital stock; government spending; price level effect; demand pressure; excess demand; trade balance
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The dynamic responses of a developing economy to a variety of policy and external shocks are studied using an empirical macroeconomic model which embodies rational expectations, perfect capital mobility, and import rationing. These features, which are relatively new in developing-country modelling, prove to be quite important in determining the model’s dynamic properties. This suggests that macroeconomic management in developing countries--such as that involved in short-run stabilization--requires that such features be explicitly taken into account.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund