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The Significance of Customer Markets for the Effects of Budgetary Policy in Open Economies

Edmund S. Phelps
Annales d'Économie et de Statistique
No. 3, Déficit public / Public Deficit (Jul. - Sep., 1986), pp. 101-117
Published by: GENES on behalf of ADRES
DOI: 10.2307/20075617
Stable URL: http://www.jstor.org/stable/20075617
Page Count: 17
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The Significance of Customer Markets for the Effects of Budgetary Policy in Open Economies
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Abstract

A new model of the small open economy is constructed in which home producers operate in an international "customer market". Increased public expenditure on home output causes the home real interest rate to rise, boosting the velocity of money. It may also cause home firms to shave their mark-ups, thus boosting the real supply of money. Hence employment is up, at first. But the boom is followed by a slump. /// L'article présente un modèle dans lequel les producteurs nationaux opèrent à l'intérieur d'un "marché fidélisé" ("Customer Market") international. Un accroissement des dépenses publiques en produit national génère une hausse du taux d'intérêt national, activant la vitesse de circulation de la monnaie. Cela peut également inciter les firmes nationales à rogner leurs mark-up, relançant par là l'offre de monnaie réelle. Au total l'emploi s'accroît à court terme. Mais le boom est suivi d'une dépression.

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