Is Openness Good for Stagnation?
Is Openness Good for Stagnation?
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제23권 제1호
-
2008.0324 - 41 (18 pages)
- 2

Using a symmetric multi-country model that allows for the possibility of stagnation, this paper analyzes the effects of openness on effective demand. A regime shift from autarky to free trade boosts the value of consumption utility by expanding the range of consumption goods available to people in every country. However, under stagnation, the rise in value of consumption utility lowers the time preference rate through a decline in the inflation rate, while not affecting the liquidity premium that represents the desire to hold money. Therefore, openness causes realized consumption to decrease and saving to increase. Consequently, effective demand decreases.
Ⅰ. Introduction
Ⅱ. The Model
Ⅲ. Market Equilibrium Conditions
Ⅳ. Steady State with Stagnation
Ⅴ. Autarky Versus Free Trade
Ⅵ. Conclusions
(0)
(0)