Linkage Models in Countries Economies |
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Model and reference |
Trade Linkage |
Monetary limkage |
Exchange rates |
Country coverage |
I: National models |
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LINK (Ball, Waelbroeck, Sawyer) |
Klein van Peterssen |
Capital flows among developped countries but only in short term simulation |
Fixed in long term simulations. Floating according to reacion function of PPP |
18 OECD countries, seven Comecon countries and four developing regions |
Eurolink (Ranuzzi. 1981) |
Bilateral imports determined by total imports and competing export prices |
Total inflowss set by portfolio balance |
Fixed or managed float with structural balance of payments approach |
Germany, Italy, France, UK and ROW |
II. Linkage of structural models built with monetary and exchange rate linkages in mind |
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EPA world ecometric model (Amamo et al 1982) |
Hickman-Lau |
Incomes, assets, and interst rates |
Fixed or managed float with exchange rate hands and reserve flow target |
Major seven OECD countries plus Australia, South Korea and 6 trading regions |
MCM Howe et al (1981) |
Bilateral imports determined by income and importer, exporter ad competitor prices |
Multilateral service account and direct investment flows |
Fixed or flexible with inverted capital account portfolio balance equation |
US, Canada, UK Germany and ROW |
RDX2-MPS. Heliwell 1974 |
Bilateral |
Interest rates and portfolio balance |
Fixed Bretton-Woods flexible and crawling peg |
Canada the US |
III. Models with common structure, main focus on trade linkages and non monetary linkages |
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INTERLINK OECD 1982 |
Modified Samuelson Kurihara |
None |
Fixed |
23 OECD countries plus 8 regions |
COMET Barten et al (1976) |
Alcantara-Barten-Italianer |
None |
Fixed |
11 european countries, US, Japan and 5 regions |
DESMOS (Waelbroeck Dramais 1976,1981) |
Hickman-Lau with income and capacity utilization adjustments |
None |
Fixed |
8 EEC countries and US with trade links to Japan and 3 regions |
METEOR Kooyman 1982 |
Modified Samuelson Kurihara |
None |
Fixed |
6 EEC countries plu US, Japan Canada and 5 regions |
IV: Groupings small national models with common structure focussed on monetary and exchange-rate linkages |
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Fair 1981 |
Export share equations |
Capital flow equations interest rate, reaction functions |
Exchange rate reaction functions |
64 countries plus ROW |
Darby 1982 |
Indirect |
Interest rates and reserve flows |
Fixed and flexible rates from inverted import demand equation |
Seven major OECD countries plus Netherlands |
Minford et al (1981) |
Indirect |
Interest rates and reserve flows |
Real interest parity condition on real sxchange rate |
Seven major OECD plus Netherlands, Belgium and three regions (with trade links only). |
Source: nfm |
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