Abstract
There has long been certain defects in the treatment of imported intermediate goods in the usual Keynesian foreign trade multiplier analysis. In its fundamental equation for an open economy, \(Y + M = C + I + E\), the external sector is combined inconsistently with the domestic sector in the circular flow. Y stands for net national product excluding intermediate goods, while M stands for imported goods. Including intermediate products.
This chapter appeared originally, under the same title, in The Quarterly Journal of Economics, Vol. 74, No. 1, Feb. 1960, and is reproduced with minor revisions and with some additions to the Tables. The author is indebted to Mr. Shingo Masegi, professor of Yokohama City University, for the mathematical formulation in Section VI.
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© 1976 Springer-Verlag Berlin · Heidelberg
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Miyazawa, K. (1976). Foreign Trade Multiplier, Input-Output Analysis and Consumption Function. In: Input-Output Analysis and the Structure of Income Distribution. Lecture Notes in Economics and Mathematical Systems, vol 116. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-48146-8_3
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DOI: https://doi.org/10.1007/978-3-642-48146-8_3
Publisher Name: Springer, Berlin, Heidelberg
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