Structural Flexibility: A Partial Ordering / Kala Krishna, Marie Thursby.

Format:

Book

Author/Creator:

Krishna, Kala.

Contributor:

National Bureau of Economic Research.

Thursby, Marie.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4615.

NBER working paper series no. w4615

Language:

English

Subjects (All):

Economic history.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Structural Flexibility

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Cambridge, Massachusetts : National Bureau of Economic Research, 1994.

Summary:

We use an approach developed by Krishna and Young to examine the ability of economies to adjust to exogenous shocks. While, in general, economies cannot be ranked in terms of their flexibility, we provide a partial ordering for certain types of economies. In particular, properties of the revenue function are used to show that placing restrictions on factor mobility and on production in certain sectors reduces the flexibility of a small open economy with respect to all price, endowment, and technology shocks of small enough magnitude. Since one can think of these restrictions as distortions, we would expect them to reduce the level of GNP in the economy. The insight provided by the analysis of flexibility is that, not only is the level of GNP affected, but also the intrinsic ability of the economy to adjust to shocks is reduced.

Notes:

Print version record

January 1994.