This paper considers the issue of whether a small developing economy such as Hong Kong faces a perfectly elastic demand for its exports of manufactured goods. We construct a simultaneous demand and supply system which is estimated using Full Information Maximum Likelihood methods, and which...

This paper investigates the current debate regarding the robustness of estimates of export demand and supply elasticities for LDCs and NIEs obtained by recent empirical studies. The empirical findings reported in the paper suggest that price elasticities of demand are indeed low, and that there...

This paper analyzes the impact of terms of trade and risk-premium shocks on a small open economy in an intertemporal, Dutch disease model, with international capital mobility. It is shown that when the economy experiences a permanent improvement in the terms of trade, the Dutch disease effect...

This paper considers fiscal and monetary policy in a short-run static macroeconomic model. There are two objectives, control of inflation and control over the growth of national wealth, and a third outcome of importance, a high level of employment. There are two instruments, monetary policy (the...

A simple model of North-South interaction is presented with a Keynesian North producing industrial goods and a Classical South producing corn. If the terms of trade clear the corn market then commodity price stabilisation can only slightly increase the average value of Northern real consumption....

This Paper presents a new model of the East Asian crisis that combines three elements – multiple equilibria, investment collapse, and moral hazard – in a single simple account. We locate the causes of the crisis in poor financial regulation, highly-geared financial institutions, and implicit...

The paper evaluates some proposals for macroeconomic stabilization in an open economy, which take the form of simple rules. The first rule assigns monetary policy to inflation control and does not require fiscal intervention. The second rule adds fiscal control of a foreign wealth target to the...

This paper first briefly describes the role of the WTO and its history. It then lays out a simple bargaining model of international negotiations, which can be used for understanding the Doha round of talks. This simple framework is used to distil and discuss a number of potential explanations...