Zarzosa Valdivia, Fernando
An exploration of the interdependencies betweeen the real exchange rate and the size of the tradable sector in a small open economy [recurso electrónico] /
Fernando Zarzosa Valdivia, Eric J. Pentecost
En: Cultura Económica [recurso electrónico] / UCA. Centro de Estudios en Economía y Cultura. -- Año 40, Vol. 40, no. 103 (jun., 2022). -- Buenos Aires : UCA. Centro de Estudios en Economía y Cultura, 2007

Incl. ref.
Incl. graf.
Modo de acceso: World Wide Web. PDF.
Descripción basada en la visualización del recurso el 15/2/2023.
Disponible en: https://erevistas.uca.edu.ar/index.php/CECON/article/view/4088/4037

The complex interdependences between the real exchange rates and the size of the tradable goods sector have not been fully explored in the existing literature. This article aims to full this gap by developing a neo-classical Australian general equilibrium model to further explore these linkages and to explain the impact of total factor productivity, factor endowments, terms of trade and debt services (net of transfers and/or aid flows) on the equilibrium real exchange rate and the size of the tradable sector. Measuring changes in the allocation of resources by changes in the share of tradable goods in GDP, we show that in addition to the well-known spending and resource movement effects, that there are four further separately identifiable effects, which we refer to as the extraordinary profit effect, the traded price effect, the expenditure movement effect and the debt substitution effect. The relative strengths of these additional effects help to determine the size of the tradable goods sector and hence the economic structure of a small open economy.
ISSN: 18525342

1. TIPO DE CAMBIO REAL I. Pentecost, Eric J.