The procedure of treating exportables and importables
as a single class of goods (traded goods) is quite legitimate so long as the terms of trade are unaffected by events inside Australia.
x]) denotes how much more or less cash the consumer spends on importables
relative to that spent on the exportable good or, alternatively, the mark-up over the relative prices of importables
q faced by a consumer.
the key results of the Sjaastad-Clements model is that the proportional change in the price of nontraded goods is a weighted average of the proportional change in price of the two traded goods, with the weight being determined by compensated supply and demand elasticities of nontraded goods with respect to its own price and the price of importables
, in contrast, would be harmed by the reduction in tariff and nontariff barriers and would be forced to compete more directly with imported goods.
In the importable
(m) and exportable (x) sectors, the profit-maximizing labor and output choices can be written as:
In what follows, we assume that importables
are protected by a quota.
Domestic and world price vectors of the importable
goods are represented by p[prime] = ([p[prime].
The capital/labour ratio of importables
increased markedly relative to exportables from 1986 to 1996.
whether it is coming from increases in the price of importables
or decreases in the price of exportables.
More precisely, a given amount of produced exportables is now changed against a smaller amount of importables
Notice that a tightening of the quota (a decrease in Q) reduces the consumption of the importables
Net capital inflows, which are spent on importables
would have no effect on the real exchange rate directly.
The small open economy model includes three commodities namely, non-tradables, importables
Selection of these three sectors is dictated by the availability of data on these sectors, and the fact that the majority of the emigrants belong to these sectors: We consider agricultural goods as exportables and manufacturing goods as importables
because Pakistan is a net exporter of agricultural goods and a net importer of manufacturing goods.
L]] of shadow prices for non-tradeables and importables