Modern macroeconomic models with a Keynesian flavour usually involve nominal rigidities in wages and commodity prices. A typical microfoundation recurs to wage bargaining in the labour markets and monopolistic competition in the commodity markets (e.g. Blanchard/Giavazzi). A characteristic...

In this paper we investigate the closed-economy Keynes-Wicksell-Goodwin model of Chiarella and Flaschel (2000) for the case of two interacting open economies. We introduce these coupled two-country KWG dynamics on the extensive form level by means of a subdivision into nine modules describing...