The Multiplier Approach

Giancarlo Gandolfo

Chapter 8 in International Finance and Open-Economy Macroeconomics, 2016, pp 127-159 from Springer

Abstract: Abstract The multiplier analysis of the balance of payments (also called the foreign trade multiplier) has a twofold relevance. On the one hand, it can be seen as the counterpart, always in a partial equilibrium context, to the analysis based solely on exchange-rate variations, and thus as a step towards the integration of the two mechanisms. On the other hand, it has an importance of its own insofar as it is applicable to an institutional setting in which the exchange rate and prices are rigid. In this chapter all cases are examined: the small open-economy, the two-country case, and the n-country case.

Keywords: Intermediate Good; Aggregate Expenditure; Domestic Output; Marginal Propensity; Foreign Good (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/978-3-662-49862-0_8

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