This paper resolves a long-standing obstacle in the development and use of the dependent economy model with investment. This obstacle derives from the fact that models of the dependent economy with investment have been criticized for arbitrarily assuming that capital is either tradable or...

This paper considers the role of the relative price of non-traded goods and the current account in the adjustment of a small open economy to the receipt of an international transfer. The paper shows that the economy's macroeconomic adjustment to the transfer depends upon the relative capital...

This paper analyzes the impact of differential tariffs on consumption and investment in a specific factors model of a small open economy in which capital is accumulated over time. Particular attention is devoted to the welfare aspects. highlighting the cost of the intertemporal distortions...