Abstract
This chapter presents economic fluctuation and stabilization models in a small open economy. Section 9.1 addresses the Mundell-Fleming-Dornbusch model under a fixed exchange rate regime. Section 9.2 adds the balance-of-payments equation to this model, since wealth is an argument in the consumption function. Section 9.3 introduces the fixed exchange rate regime in a new Keynesian model. Section 9.4 deals with the Mundell-Fleming-Dornbusch model under a flexible exchange rate regime. Section 9.5 analyzes the extended Mundell-Fleming-Dornbusch model for a flexible exchange rate. Section 9.6 presents the flexible exchange rate for the new Keynesian model.
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Barbosa, F.d.H. (2018). Economic Fluctuation and Stabilization in an Open Economy. In: Macroeconomic Theory. Springer, Cham. https://doi.org/10.1007/978-3-319-92132-7_9
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DOI: https://doi.org/10.1007/978-3-319-92132-7_9
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Publisher Name: Springer, Cham
Print ISBN: 978-3-319-92131-0
Online ISBN: 978-3-319-92132-7
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