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Thanks.
Macroeconomics with monopolistic competition in pictures
Thanks to my daughter, and to commenters, I have now learned "Paint", and can now post a simple diagrammatic exposition of macroeconomics with monopolistically competitive firms. This may be useful in its own right, and can help readers understand the point I was making in my previous post. The ...
I see your point (main article) applied to a large and relatively closed economy, such as the USA. But in the case of a small open economy, with a fixed exchange rate, wouldn't it be different, with the non-tradeable sector working under monopolistic competition, but the tradeable sector working closer to perfect competition (with consequences for the macro equilibrium)? And in this case, if, for instance, the real exchange rate becomes (and remains) overvalued, couldn't the situation resemble the Cuban economy problem (in terms of "national" aggregates), with persistent excess demand (cleared, in this case, through the accumulation of external deficits and debt)?
Macroeconomics with monopolistic competition in pictures
Thanks to my daughter, and to commenters, I have now learned "Paint", and can now post a simple diagrammatic exposition of macroeconomics with monopolistically competitive firms. This may be useful in its own right, and can help readers understand the point I was making in my previous post. The ...
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Posted Jan 10, 2010 at VB's blog
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