Relative Quantities and Prices in Small and Open Developing Economies

Arslan Razmi ()
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Arslan Razmi: University of Massachusetts, United States

Ensayos Económicos, 2021, vol. 1, issue 78, 83-112

Abstract: This paper employs variants of a simple framework to discuss the determination of sectoral output and relative prices in a stylized small open developing economy which consists of a traditional sector that produces non-tradables and a modern sector that produces internationally traded goods. The baseline model has the flavor of the traditional two-good dependent economy framework with surplus labor. I then introduce a series of modifications in the structure of the framework to (briefly) explore aspects such as distributional conflict, external balance constraints, capital account considerations, natural resource discoveries, and supply-side bottlenecks. The analysis demonstrates that the basic structure of the framework provides a flexible tool for investigating important aspects of the development process in a small open economy.

Keywords: industrialization; income distribution; real exchange rate; surplus labor (search for similar items in EconPapers)
JEL-codes: F41 F43 O11 O14 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bcr:ensayo:v:1:y:2021:i:78:p:83-112

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