Archives

  • 2018-07
  • 2018-10
  • 2018-11
  • 2019-04
  • 2019-05
  • 2019-06
  • 2019-07
  • 2019-08
  • 2019-09
  • 2019-10
  • 2019-11
  • 2019-12
  • 2020-01
  • 2020-02
  • 2020-03
  • 2020-04
  • 2020-05
  • 2020-06
  • 2020-07
  • 2020-08
  • 2020-09
  • 2020-10
  • 2020-11
  • 2020-12
  • 2021-01
  • 2021-02
  • 2021-03
  • 2021-04
  • 2021-05
  • 2021-06
  • 2021-07
  • 2021-08
  • 2021-09
  • 2021-10
  • 2021-11
  • 2021-12
  • 2022-01
  • 2022-02
  • 2022-03
  • 2022-04
  • 2022-05
  • 2022-06
  • 2022-07
  • 2022-08
  • 2022-09
  • 2022-10
  • 2022-11
  • 2022-12
  • 2023-01
  • 2023-02
  • 2023-03
  • 2023-04
  • 2023-05
  • 2023-06
  • 2023-07
  • 2023-08
  • 2023-09
  • 2023-10
  • 2023-11
  • 2023-12
  • 2024-01
  • 2024-02
  • 2024-03
  • 2024-04

    • The long term behavior model is

    2018-11-13

    The long term behavior model is similar to the original model Dixon and Thirlwall (1975a), that is, assuming the constancy of all exogenous variables, behavior depends on values. As . Thus, the condition for cumulative divergence is that . If , it will occur constant differences in growth rates of . However, unlike the original model, in this extended version shocks in terms of economic policy (specifically, the exchange rate policy and investment policy in R&D or those related to the intrinsic ability of assimilation of technological spillovers) affect the productivity and therefore the growth rate. In the original Dixon and Thirlwall (1975b) model it is assumed that an exogenous event in a particular country generates stimulus to other countries growth. Given the Verdoorn’s law, this higher income growth increases productivity and thus generates new impulses for growth. As not all countries (or regions) experienced the same exogenous shock, economic growth rates diverge over time. In the extended version of the raas inhibitors model, in addition to this possibility of exogenous shocks, it is explicitly incorporated the possibility of technological catching up and the effects of increased generation and raas inhibitors capacity of technological spillovers, and the role of the level of the real exchange rate. So to occur a change in the level in economic growth rates is necessary that the determinants of are such that accelerate productivity gains and structural change, that is, the economy must maintain a real exchange rate depreciated in relation to its industrial equilibrium level and increase the degree of development of the National Innovation System (NIS).
    Concluding remarks
    Introduction The new consensus or the “three equation” model was fully analyzed by Carlin and Soskice (2010), Romer (2000), Taylor (1997,2000) and now is becoming popular even in the undergraduate textbooks (Mankiw, 2010). The New Consensus model with inflation targeting is based on the following theoretical structure: (i) the effective output depends on the real interest rate (stimulating investment spending), (ii) the existence of an accelerationist Phillips curve and (iii) a Taylor rule, relating the Monetary Authority response via nominal interest rate to deviations of inflation from its target and output from its potential. The potential output is determined by the stocks of factors of production – capital and labor – and their productivity, according to the neoclassical theory of value and distribution. In an open-economy context, the new consensus model postulates that the Real Interest Rate Parity holds (Romer, 2006). It is implicit on this assumption that that the Uncovered Interest Rate Parity holds in the short run and that the individuals operating in the exchange rate market have Rational Expectations and believe that the Purchasing Power Parity holds in the long run (Lavoie, 2000). The main results of this model are well known. The long-run core inflation is related with demand shocks and does not depend on the exchange rate (open-economy long run neutrality); the inflation control mechanism involves the impact of the real interest rate on aggregate demand, targeting a null output gap. There is no trade-off between inflation and productive capacity, since the latter is independent of the effective output; and inflation target can always be achieved, because the Monetary Authority can always set the real interest rate in line with the natural rate of interest. There are, however, a considerable number of works that evaluate critically the new consensus model in a closed-economy context. They show that by changing some of the hypotheses of this model (such as the accelerationist Phillps Curve), different results can emerge regarding output, productive capacity and inflation dynamics (Setterfield, 2004; Lavoie and Kriesler, 2007; Lavoie, 2006; Atesoglu and Smithin, 2006; Serrano, 2006; Aspromourgos, 2007; Setterfield, 2015). For open economy, we have few examples of alternative models, such as Cordero (2008) and Vera (2014).