A multi-sectoral approach to the Harrod foreign trade multiplier

Trigg, Andrew B and Araujo, Ricardo Azevedo (2018). A multi-sectoral approach to the Harrod foreign trade multiplier. European Journal of Economics and Economic Policies: Intervention, 15(1) pp. 91–104.

DOI: https://doi.org/10.4337/ejeep.2017.0024

Abstract

With this inquiry, we seek to develop a multi-sectoral version of the static Harrod foreign trade multiplier, by showing that it can be derived from an extended version of the Pasinettian model of structural change and international trade. This new version highlights the connections between the balance-of-payments and levels of employment and production. It is also shown that from this disaggregated version of the Harrod foreign multiplier we can derive an aggregate version of the multiplier. By following this approach we go a step further in establishing the connections between the Structural Economic Dynamic and Balance-of-Payments Constrained Growth approaches.

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