Small Union of Ten Countries

Abstract

Imagine an increase in Belgian government purchases. How does this impinge on Belgian income? And what about income in the other union countries? We start again from the premise that the union countries are the same size and have the same behavioural functions. The fiscal policy multipliers can be obtained in full analogy to chapters 1 and 2:

$$ \frac{{d{Y_{1}}}}{{d{G_{1}}}} = \frac{9}{{10(1 - c + q + m)}} $$

((1))

$$ \frac{{d{Y_{2}}}}{{d{G_{1}}}} = \frac{{d{Y_{3}}}}{{d{G_{1}}}} = \ldots = \frac{{d{Y_{{10}}}}}{{d{G_{1}}}} = - \frac{1}{{10(1 - c + q + m)}} $$

((2))