Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 General overview and stylized facts
- 2 The Keynes–Ohlin controversy
- 3 Welfare effects: Samuelson's theorem
- 4 Generalizations of Samuelson's theorem
- 5 Clouds on the horizon 1: distortions
- 6 Clouds on the horizon 2: third parties
- 7 The economics of multilateral transfers
- 8 The consequences of tied aid
- 9 Imperfect competition
- 10 Dynamics, money and the balance of payments
- Mathematical appendix
- References
- Index
10 - Dynamics, money and the balance of payments
Published online by Cambridge University Press: 07 January 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 General overview and stylized facts
- 2 The Keynes–Ohlin controversy
- 3 Welfare effects: Samuelson's theorem
- 4 Generalizations of Samuelson's theorem
- 5 Clouds on the horizon 1: distortions
- 6 Clouds on the horizon 2: third parties
- 7 The economics of multilateral transfers
- 8 The consequences of tied aid
- 9 Imperfect competition
- 10 Dynamics, money and the balance of payments
- Mathematical appendix
- References
- Index
Summary
Introduction
The dynamic issues involved with international transfers have been largely ignored in the previous chapters. This chapter will only partially fill this gap as it is beyond the scope of this book to give an extensive treatment of dynamic optimization in the multitude of economic growth frameworks with a variety of behavioral assumptions. We start the discussion as close as possible to the dual framework used most often in the book, first by investigating complete futures markets and then by looking at financial transfers and the balance of payments in a context of Hicksian temporary equilibria. We then continue the analysis within a neoclassical, continuous-time dynamic optimization framework to look at the effects of transfers over time and the optimal timing of transfers, with or without cooperation.
Quasi dynamics with complete futures markets
Payments imbalances over time need not reflect real disequilibria, but can simply reflect differences between countries in the demand for future versus present consumption. The many-goods model of chapter 4 can have a dynamic interpretation if we distinguish between goods available at different periods as different commodities; see Arrow and Debreu (1954) and Debreu (1959). If prices for future sales and deliveries had a comparable basis, say at the initial date, there would be one budget constraint, implying that the present value of sales would have to be at least as great as the present value of purchases. At different time periods there can then be either trade deficits or surpluses, but the present value of all trade deficits would have to be non-positive.
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- Information
- The Economics of International Transfers , pp. 174 - 188Publisher: Cambridge University PressPrint publication year: 1998