Introduction
We have developed the stock flow consistent methodology in previous lectures, culminating in the model of portfolio choice, PC, for a closed economy. But this is a class in international monetary economics, so it’s important to get onto the open economy as soon as possible. This week, we make two big strides in that direction, bringing in a two region economy in the model REG, and developing the conditions for the full-blown open economy model OPEN. We’ll also do some numerical examples as we go to ground the material properly.
In particular, we are interested in why the evolution of a North-South regional economy is different to a single-region portfolio choice model without expectations.
Click the link below to download handouts, slides, and programs for the model REG.
Length: 1.5 hours. Handout Right Click Here to Download the Handout Slides
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