Ensayos Económicos N°78- Noviembre 2021

Relative Quantities and Prices in Small and Open Developing Economies

Arslan Razmi
University of Massachusetts, United States


This paper employs variants of a simple framework to discuss the determination of sectoral output and relative prices in a stylized small open developing economy which consists of a traditional sector that produces non-tradables and a modern sector that produces internationally traded goods. The baseline model has the flavor of the traditional two-good dependent economy framework with surplus labor. I then introduce a series of modifications in the structure of the framework to (briefly) explore aspects such as distributional conflict, external balance constraints, capital account considerations, natural resource discoveries, and supply-side bottlenecks. The analysis demonstrates that the basic structure of the framework provides flexible tool for investigating important aspects of the development process in a small open economy.

Palabras Clave: industrialization, income distribution, real exchange rate, surplus labor

Códigos JEL: F41, F43, O11, O14

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Fecha de publicación: 25/11/2021

Cómo citar este trabajo: Razmi, A. (2021); "Relative Quantities and Prices in Small and Open Developing Economies", Ensayos Económicos, N°78, Noviembre, pp. 83-112.