The Dynamics of a Small Open Economy in a Ricardian Model with a Market for Land under Equilibrium Expectations

Name: The Dynamics of a Small Open Economy in a Ricardian Model with a Market for Land under Equilibrium Expectations
Brand: Vita e Pensiero
Price: 6.00 EUR
Availability: OnlineOnly

digital

Article

Magazine

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI

Issue

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2007 - 1

Title

The Dynamics of a Small Open Economy in a Ricardian Model with a Market for Land under Equilibrium Expectations

Author

Carlo Beretta

Publisher

Vita e Pensiero

Format

Article |

Pdf

Pages

Online from

01-2007

Issn

0035-676X (print) | 1827-7918 (digital)

€ 6.00

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Description

Each country produces just one good, corn, by means of corn, labour and land. Capitalists allocate their funds between corn production and the purchase of land so as to equalise the rate of profit on these activities under equilibrium expectations. Autarky in natural equilibrium is briefly discussed. Opening the economy allows capitalists to invest either domestically or abroad. In the small country case, equilibrium expectations make the economy very unstable. Under most circumstances, the economy will register an inflow of capital, which can be employed productively only in the short run, if at all, and thereafter will translate in speculation in land, followed by a balance of payments crisis and collapse on this market.