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CAUDEX TERTIUS

  • Tönu Puu
Chapter

Abstract

The business cycle model proposed in Chap.  9 calls for one obvious generalization; from a closed and isolated economy to open economies connected by international/interregional trade. The Metzler 1950 model with constant import propensities provides an obvious frame for such generalization. A natural starting point is a case with two equal economies. Our business cycle model would provide for growth trends and growth rate cycles in each region, which would now be modified trough external influences from the other economy. It is well known for coupled oscillators that they have two basic modes of operation: in phase, or in opposite phase, and that any outcome can be considered as a mixture of these. An obvious agenda is to check this out for the business cycle model. A more difficult problem is described at the end, i.e., how to model the interaction between economies of different size.

References

  1. Metzler LA (1950) A multiple- region theory of income and trade. Econometrica 18:329–354CrossRefGoogle Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Tönu Puu
    • 1
  1. 1.Centre for Regional Science (CERUM)Umeå UniversityUmeåSweden

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