Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75762
Authors: 
Coto-Martínez, Javier
Dixon, Huw D.
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper 550
Abstract: 
In this paper we develop a general model of an imperfectly competitive small open economy. There is a traded and non-traded sector, whose outputs are combined in order to produce a single final good that can be either consumed or invested. We make general assumptions about preferences and technology, and analyze the impact of fiscal policy on the economy. We find that the fiscal multiplier is between zero and one, and provide sufficient conditions for it to be increasing in the degree of imperfect competition. We also are able to compare the multiplier under free-entry and with a fixed number of firms and welfare. A simple graphical representation of the model is developed.
Subjects: 
Imperfect competition
open economy
fiscal policy
JEL: 
E20
E62
F40
Document Type: 
Working Paper

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