Rebalancing through expenditure and price changes

von Arnim, Rudiger and K P, Prabheesh (2013) Rebalancing through expenditure and price changes. International Review of Applied Economics, 27 (4). pp. 531-556. ISSN 0269-2171

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Abstract

This paper puts forth a Neo-Kaleckian open economy model of two countries in order to investigate adjustment of US–China external imbalances. First, a stylized fixed mark-up model is presented, and discussed based on graphical analysis. Second, we present estimates of bilateral income and price elasticities of imports. Third, we employ the model for simulation analysis. Specifically, we randomly distribute expenditure change across government, investment and imports and calculate the exchange rate change necessary to lead to an equal change in the bilateral external imbalance. Doing so repeatedly allows us to estimate probability distributions of endogenous variable changes.

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IITH Creators:
IITH CreatorsORCiD
K P, PrabheeshUNSPECIFIED
Item Type: Article
Uncontrolled Keywords: Neo-Kaleckian model of demand and distribution, global imbalances, simulations, C2, C68, E12, E27, F32, F47
Subjects: Social sciences > Political Science & Economics
Divisions: Department of Liberal Arts
Depositing User: Mr. Siva Shankar K
Date Deposited: 22 Sep 2014 07:35
Last Modified: 28 Aug 2017 09:59
URI: http://raiith.iith.ac.in/id/eprint/36
Publisher URL: https://doi.org/10.1080/02692171.2012.760067
OA policy: http://www.sherpa.ac.uk/romeo/issn/0269-2171/
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