Market imperfections and the instability of open economies

• 成果类型: Article
• 署名作者: Meng, QL; Velasco, A
• 署名单位: Harvard University; National Bureau of Economic Research; Chinese University of Hong Kong
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2003.08.001
• 发表日期: 2004
• 页码: 503-519
• 关键词: market imperfections; Small open economy; Equilibrium indeterminacy; sunspots

摘要

In the presence of small market imperfections, the transitional dynamics of an open economy can become indeterminate, in that there exist an infinite number of equilibrium paths converging to a unique steady state. In contrast to closed economy models, in the open economy, such indeterminacy can arise independently of the curvature of the utility function in consumption. The results suggest that with market imperfections, open economies can be subject to fluctuations caused by randomness unrelated to the economy's fundamentals. (C) 2003 Elsevier B.V. All rights reserved.