| Summary: | Governments spend large sums of monies on various services
provided to both firms and households. However, most open economy
studies do not take government spending on industries into account.
The present study deals exclusively with government spending on
industries. This spending is incorporated into neoclassical
production functions in terms of a public input. The purpose of
this thesis is three fold: (i) to investigate the impact of terms of-
trade changes in a small public input economy;(ii)to explore
the international transmission of government spending on public
inputs; and (iii) to examine the relationship between government
spending on public inputs and the pattern of international trade.
The thesis consists of three essays. In a three-period
setting, the first essay examines the impact of terms-of-trade
changes on the allocation of resources in a small open economy. The
private sector of the economy produces two final goods by means of
private inputs and a public input. The public input is produced by
the public sector. The allocation of resources between the private
and public sectors is endogenous and the public input is supplied
with a lag of one period. The essay demonstrates that the timing of
terms-of-trade changes is critical. The impact of terms-of-trade
changes in the presence of labour unemployment is also considered.
The second essay develops a two-country, one-good, and two factor
general equilibrium model with a pure public input and
international factor mobility. International transmission of
government spending on a pure public input and the implications of
potential international coordination are investigated in the short-run
and the long-run. The essay also considers the international
transmission of government spending on a pure public input in the
context of a three-country model where two countries have formed an
economic union.
The third essay develops a two-country, two-good, and two factor
general equilibrium model with a congestible public input.
The model is used to investigate the relationship between
government spending on a congestible public input and the pattern
of international trade. === Arts, Faculty of === Vancouver School of Economics === Graduate
|
|---|
