Theoretical aggregate supply and demand model for the venezuelan economy

José Mora ()

Economía, 2018, vol. 43, issue 46, 65-100

Abstract: This paper presents an aggregate demand and supply model for the Venezuelan economy assuming two productive sectors (oil and non-oil), a fixed exchange rate regime, and an absolute restriction to capital mobility. The model helps explain the impacts that fiscal, monetary, and productivity domestic and foreign shocks have on real output, inflation and overall economic activity in Venezuela. Although the results are consistent with economic theory, it is necessary to emphasize that, contrary to its standard postulates, a Bolivar devaluation contracts real output and raises the price level and that an oil price increase causes an increase in real output but triggers an ambiguous effect on the price level.

Keywords: Aggregate demand; aggregate supply; business cycles; exchange rate regimes. (search for similar items in EconPapers)
JEL-codes: B22 E12 E32 N56 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ula:econom:v:43:y:2018:i:46:p:65-100

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