The Burden of Government Debt in an Almost Small Open Economy

Part of the Central Issues in Contemporary Economic Theory and Policy book series (CICETP)


This paper reviews and extends some recent work that I have done on the burden of government debt in an “almost small” open economy. An almost small open economy has unrestricted access to the international capital market at a given world real interest rate (plus perhaps an exogenous country risk premium) and faces given world prices for its imports, but it has market power in its export sector because its exports are perceived to be imperfect substitutes for the tradeables of other countries. The export industry is also assumed to be (approximately) perfectly competitive so whatever market power the country as a whole possesses will not be exercised by individual firms choosing the appropriate price markups; it will require some from of government intervention such as export taxes or quotas.


Real Exchange Rate Real Interest Rate Small Open Economy Government Debt International Capital Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. [1]
    Armington P.A.: «A Theory of Demand for Products Distinguished by Place of Production», IMF Staff Papers vol. 16, March 1969.Google Scholar
  2. [2]
    Burgess D.F.: «Production Theory and the Derived Demand for Imports», Journal of International Economics, vol. 4, May 1974.Google Scholar
  3. [3]
    Burgess D.F.: «Deficits and Intergenerational Welfare in Almost Small Open Economies», Department of Economics, University of Western Ontario, Working Paper unpublished, November 1989.Google Scholar
  4. [4]
    Diamond P.A.: «National Debt in a Neoclassical Growth Model», American Economic Review, vol. 55, December 1965.Google Scholar
  5. [5]
    Goldstein M. — Kahn M.: «Income and Price Effects in Foreign Trades», in Jones R. — Kenen P. (a cura di): Handbook of International Economics, vol. 2, Amsterdam, North-Holland, 1985.Google Scholar
  6. [6]
    Persson T.: «Deficits and Intergenerational Welfare in Small Open Economies», Journal of International Economics vol. 19, August 1985.Google Scholar

Copyright information

© SIPI Srl. Rivista di Politica Economica 1993

Authors and Affiliations

  1. 1.University of Western OntarioCanada

Personalised recommendations