Essays in Macroeconomics of an Open Economy

The large aggregates in the economy such as consumption, investment, production of the domestic and the international sectors, international capital flows, financial accumulation and indebtedness, are analyzed in this book in terms of problems in time-optimization for enterprises and households. An examination of the effects of fiscal and monetary policies and exchange-rate variation leads to the conclusion that it is necessary that they should all be introduced simultaneously in order to stabilize demand. All household decisions on consumption, savings and financial dispositions are conditioned by uncertainty and this also afflicts companies, who make even more complex simultaneous decisions on production, real investment, financing and market strategy. The book argues that the marginal efficiency-of-investment function derived from these decisions is fundamentally different from the marginal productivity of capital in the neoclassical sense. An economy which grows through the accumulation of capital, increase in the labour supply and technological progress is the framework in which all of these variables operate. This determines the allocation of factors between domestic and international production and the development of foreign trade. This book also examines growth of both public debt and international investment in depth. This monograph on macroeconomics and international economics is intended for researchers.