A method for macroeconomic consistency in current and constant prices

Ali Khadr and Klaus Schmidt-Hebbel

No 306, Policy Research Working Paper Series from The World Bank

Abstract: This paper extends earlier work on current-price budget identities to treat constant-price flow relations. It introduces relative prices and constant-prices values for all relevant output and aggregate demand components and permits a distinction between real variables and relative price changes. It also permits breaking the changes in asset and liability holding down into: (a) changes in real holdings; and (b) capital gains and losses due to inflation and exchange rate depreciation. This makes possible a distinction between savings and a change in real wealth or"adjusted"savings.

Keywords: Economic Theory&Research; Banks&Banking Reform; Economic Stabilization; Environmental Economics&Policies; Macroeconomic Management (search for similar items in EconPapers)
Date: 1989-12-31
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Citations: View citations in EconPapers (4)

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