Comment on 'Capacity Utilization, Foreign Portfolio Investment and International Debts and Deficits'

Harvey Gram

Review of Political Economy, 2002, vol. 14, issue 3, 357-377

Abstract: The linear structure of the model in Mertzanis (2000) points to errors in his Table 1. In a number of cases, inequality constraints on the model's endogenous variables are violated. Satisfying all constraints imposes restrictions on the model's parameters. The focus here is on wage shares which must be restricted to ensure a meaningful solution. Depending on savings propensities, full utilization of capital at a higher interest rate may require higher rather than lower wage shares in one or both countries.

Date: 2002
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DOI: 10.1080/09538250220147886

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