Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-23T07:05:51.461Z Has data issue: false hasContentIssue false
  • English
  • Français

INFLATION AND PATTERN OF TRADE IN A DYNAMIC SPECIFIC-FACTORS MODEL WITH MONEY

Published online by Cambridge University Press:  28 April 2005

SHI-FENG CHUANG ,
TEH-MING HUO  and
PO-SHENG LIN
SHI-FENG CHUANG
Affiliation:
Tamkang University
TEH-MING HUO
Affiliation:
National Chengchi University
PO-SHENG LIN
Affiliation:
National Chengchi University
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper presents a dynamic specific-factors model with money introduced through a cash-in-advance constraint. Two types of consumption goods are produced, and three types of factors—labor, capital, and land—are used. The cash-in-advance constraint is imposed on different sets of goods. When the constraint is imposed exclusive of the investment, inflation affects the pattern (and volume) of trade through a commodity-substitution effect. When the constraint is imposed inclusive of the investment, inflation may affect the pattern of trade through both the commodity-substitution effect and the factor-supply effect. In each case, we examine and prove the dynamic stability property of the steady-state equilibrium.

Keywords

Cash in AdvanceDynamic Specific-Factors ModelInflationPattern of Trade
Type
ARTICLES
Information
Macroeconomic Dynamics , Volume 9 , Issue 3 , June 2005 , pp. 358 - 371
Copyright
© 2005 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Huo T.-M. 1997 Inflation and capital accumulation in a two-sector cash-in-advance economy. Journal of Macroeconomics 19, 103– 115.Google Scholar
Jones R. 1971 A three-factors model in theory, trade and history. In, J.N. Bhagwati (ed.), Trade, Balance of Payments and Growth: Essays in Honor of C. Kindleberger, pp. 3– 21. Amsterdam: North-Holland.
Jones R. and P. Neary 1984 The positive theory of international trade. In R.W. Jones & P. Kenen (eds.), Handbook of International Economics, pp. 1– 53. Amsterdam: North-Holland.
Mino K. 1997 Long-run effects of monetary expansion in a two-sector model of endogenous growth. Journal of Macroeconomics 19, 635– 655.Google Scholar
Palivos T. and C.K. Yip 1995 Government expenditure financing in an endogenous growth model: a Comparison. Journal of Money, Credit and Banking 27, 1159– 1178.Google Scholar
Roldos J. 1991 Tariffs, investment and the current account. International Economic Review 32, 175– 194.Google Scholar
Roldos J. 1992 A dynamic-specific factors model with money. Canadian Journal of Economics 25, 729– 742.Google Scholar
Stockman A. 1981 Anticipated inflation and capital stock in a cash-in-advance economy. Journal of Monetary Economics 8, 387– 393.Google Scholar
Stockman A. 1985 Effects of inflation on the pattern of international trade. Canadian Journal of Economics 18, 587– 601.Google Scholar
Wang P. and C.K. Yip 1992 Alternative approaches to money and growth. Journal of Money, Credit and Banking 24, 553– 562.Google Scholar