De Economist

, Volume 135, Issue 4, pp 488–519 | Cite as

Rationing in open economy and dynamic macroeconomics: A survey

  • Frederick van der Ploeg
Article

Summary

A survey of rationing in micro theories of macroeconomics is presented. The survey starts with a closed economy with money and inventories, which consists of a representative household, a firm and government. After a discussion of the notional demands and supplies and the properties of the Walrasian equilibrium, a discussion of the effective demands and supplies leads to an analysis of the four regimes (Keynesian unemployment, classical unemployment, repressed inflation and underconsumption). A fiscal and monetary contraction decreases sales and employment when there is Keynesian unemployment, but is expansionary (neutral) when there is repressed inflation (classical unemployment). The survey continues with an analysis of the effects of rationing in a small open economy. It considers the one-sector model and a model with a traded and a nontraded sector. The latter model is used to discuss the effects of an oil discovery on the Gulf countries and on Latin American countries. The survey ends with a discussion of rationing in dynamic economies, which leads to an analysis of the effects of expectations about future constraints on current regimes and to a discussion of ‘boot-strap’ equilibria.

Keywords

Open Economy Latin American Country Current Regime Dynamic Economy Small Open Economy 

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Copyright information

© H.E. Stenfert Kroese B.V. 1987

Authors and Affiliations

  • Frederick van der Ploeg

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