By focusing on the macroeconomic effects of temporary price shocks, this note clarifies the relationships among the terms of trade, the real exchange rate and the current account. This clarification suggests that a real depreciation might prove incapable of bringing the external imbalance back...

We set up a two-sector equilibrium growth model with heterogeneous labor to analyze the impact of the creation of common market on the member countries' growth rate. We show that the economic integration will stimulate the backward country's economic growth. In addition, we prove that whether...

This paper explores the growth effects of the enlargement of an integrated economy by making use of a many-country equilibrium growth model with heterogeneous labor. We prove that the impact of the number of member countries on the integrated economy''s growth rate is positive. In addition, we...