Abstract
This study constructs a generalized version of quasi-stationary dynamic equilibrium models and derives a set of conditions under which a uniform suppression of present and future consumptions results in what Yano calls a short-run trade surplus creation effect. This result reveals a common mechanism which concurs with a number of existing, independently obtained results that show similar effects in different model settings.
Acknowledgements
I am grateful to Rui Ota for useful comments on an earlier version of the paper. This research is partially supported by a COE grant awarded to the Faculties of Commerce and Business and of Economics at Keio University.
Notes
†See Ota Citation[2], who demonstrates that this price-pegging property is crucial in order to a short-run trade surplus creation to emerge unambiguously.