International Trade in a Disequilibrium Model

  • Wolfgang Franz
  • Gustav Heidbrink
  • Wolfgang Scheremet
  • Peter Stalder
Conference paper
Part of the Studies in International Economics and Institutions book series (INTERN.ECONOM.)

Abstract

The present paper is confined to a macroeconometric disequilibrium model for the Federal Republic of Germany. The model consists of three main building blocks: goods and labour markets and a monetary sector. Allowing for spillovers between goods and labour markets our main concern is to explain the fluctuations of aggregate output and employment. Their flexibility depends on the time span under consideration. Output and employment decisions are modelled by a three-step structure. The econometric set-up emphasizes the importance of international trade flows within a disequilibrium framework. In these models international trade is influenced by supply and demand constraints on national goods markets. More specially, imports lower national supply constraints whereas exports can be hindered by excess demand on domestic markets. These hypotheses are tested for bilateral trade flows of the FRG with five EC-countries and the USA. Our estimation results show a significant influence on imports while there is little if any evidence that exports are influenced by excess demand on home markets. The dynamic performance of the model is discussed in the last part of the paper.

Keywords

Migration Europe Income Coherence Autocorrelation 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Artus, Patrick, Guy Laroque, and G. Michel (1984). Estimation of a quarterly macroeconomic model with quantity rationing. Econometrica, 52/6:1387–1414.CrossRefGoogle Scholar
  2. Baldwin, R. (1990). Hysteresis in trade. In Franz, Wolfgang, ed., Hysteresis Effects in Economic Models. Physica Verlag, Heidelberg.Google Scholar
  3. Branson, William H. (1989). Macroeconomic Theory and Policy. New York, Harper & Row, 3rd edition.Google Scholar
  4. Dornbusch, Rudiger (1976). Expectations and Exchange Rate Dynamics. Journal of Political Economy, 84:6.CrossRefGoogle Scholar
  5. Drèze, Jacques H. and Charles Bean (1990). European unemployment: Multicountry econometric study. Scandinavian Journal of Economics, 92/2:135–165.Google Scholar
  6. Entorf, Horst, Wolfgang Franz, Heinz König, and Werner Smolny (1991). The development of German employment and unemployment: estimation and simulation of a disequilibrium macro model. In Drèze, J. and C. Bean, eds., Europe’s Unemployment Problem. MIT-Press, Cambridge.Google Scholar
  7. Franke, Jan, (1989). Neue Makroökonomik und Außenhandel. Berlin, Heidelberg, Springer.CrossRefGoogle Scholar
  8. Frankel, Jeffrey A. (1979). On the mark: A theory of floating exchange rates based on real interest differentials. American Economic Review, 69(4):610–622.Google Scholar
  9. Franz, Wolfgang (1990). Hysteresis effects in economic models. In Franz, Wolfgang, ed., Hysteresis Effects in Economic Models. Physica Verlag, Heidelberg.CrossRefGoogle Scholar
  10. Franz, Wolfgang and Heinz König (1990). A disequilibrium approach to unemployment in the Federal Republic of Germany. European Economic Review, 34:413–422.CrossRefGoogle Scholar
  11. Gaab, Werner (1982). Der Beitrag alternativer Finanzmarktmodelle zur Erklärung des DM/$—Wechselkurses von 1974(10)–1981(5). Zeitschrift füir Wirtschafts— und Sozialwissenschaften, 102(6):601–644.Google Scholar
  12. Hooper, Peter and John Morton (1982). Fluctuations in the dollar: A model of nominal and real exchange rate determination. Journal of International Money and Finance, 1:39–56.CrossRefGoogle Scholar
  13. Kirchgässner, Gebhard and Jürgen Wolters (1989). Uncovered interest parity, interest rate linkage, or independence? Empirical results for 1961–1987. Beiträge des Fachbereichs Wirtschaftswissenschaften der Universität Osnabriick, No. 8907.Google Scholar
  14. Lambert, Jean-Paul (1988). Disequilibrium Macroeconomic Models — Theory and Estimation of Rationing Models using Business Survey Data. Cambridge, Cambridge University Press.Google Scholar
  15. Lambert, Jean-Paul and Benoit Mulkay (1987). Investment in a disequilibrium context — or — does profitability really matter? CORE, Discussion Paper, No. 8703.Google Scholar
  16. Laroque, Guy (1989). Comparative estimates of a macroeconomic disequilibrium model. European Economic Review, 33:963–995.CrossRefGoogle Scholar
  17. Lipsey, R.G. (1981). The understanding and control of inflation: Is there a crisis in macroeconomics. Canadian Journal of Economics, 4:545–576.CrossRefGoogle Scholar
  18. Malinvaud, Edmond (1980). Macroeconomic rationing of employment. In Malinvaud, E.; Fitoussi, J.P., ed., Unemployment in Western Countries, p. 173–205. Macmillan, London, Basingstoke.Google Scholar
  19. Muellbauer, John and Richard Portes (1978). Macroeconomic models with quantity rationing. Economic Journal, 88:788–821.CrossRefGoogle Scholar
  20. Sneessens, Henry R. (1987). Investment and the inflation-unemployment trade-off in a macroeconomic rationing model with monopolistic competition. European Economic Review, 31:781–815.CrossRefGoogle Scholar
  21. Sneessens, Henry R. and Jacques H. Drèze (1986). A discussion of Belgian unemployment, combining traditional concepts and disequilibrium econometrics. Economica, 53:S89-S119.CrossRefGoogle Scholar
  22. Stalder, Peter (1989). A disequilibrium model with smooth regime transitions and a Keynesian spillover for Switzerland’s labor market. European Economic Review, 33:863–893.CrossRefGoogle Scholar
  23. Smolny, Werner (1991). Macroeconomic consequences of international labour migration. Simulation experience from an econometric disequilibrium model. (In this volume).Google Scholar
  24. Aiginger, K. (1987), “Production and Decision Theory under Uncertainty”, Basil Blackwell, Oxford.Google Scholar
  25. Entorf, H., W. Franz, H. König and W. Smolny (1988), “The Development of German Employment and Unemployment: Estimation and Simulation of a Disequilibrium Macro Model”, paper presented at the Conference on European Unemployment, Chelwood Gate, England.Google Scholar
  26. Lambert, J.P. (1984), “Disequilibrium Macro Models Based on Business Survey Data, Theory and Estimation for the Belgian Manufacturing Sector”, Doctoral Dissertation, CORE, Louvain-la-Neuve.Google Scholar
  27. Lambert, J.P. (1988), “Disequilibrium Macro Models, Theory and Estimation for Rationing Models Using Business Survey Data”, Cambridge University Press, Cambridge.Google Scholar
  28. Quandt, R.E. (1988), “The Econometrics of Disequilibrium”, Basil Blackwell, Oxford.Google Scholar
  29. Sneessens, H.R. and J.H. Drèze (1986), “A Discussion of Belgian Unemploy¬ment, Combining Traditional Concepts and Disequilibrium Economics”, Economica 53, pp. 89–119.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1992

Authors and Affiliations

  • Wolfgang Franz
  • Gustav Heidbrink
  • Wolfgang Scheremet
  • Peter Stalder

There are no affiliations available

Personalised recommendations