VESTNIK
Bashkirskogo universiteta

RUSSIAN
ISSN 1998-4812

Archive | Volume 20, 2015, No. 3.

MODELLING OF COUNTERACTION TO THE EXPORT SHOCKS IN A SMALL OPEN ECONOMY

Vestnik Bashkirskogo Universiteta. 2015. Vol. 20. No. 3. Pp. 922-926.
Ramazanov R. R.
Bashkir State University
3/4 Karl Marx St., 450076 Ufa, Republic of Bashkortostan, Russia.
Email: ruslan4729@mail.ru

Abstract

During the onset of the export shocks, it is particularly important for a state with limited export diversification to pursue a balanced policy of stabilization, which would enable it to go the crisis phase smoothly, without social and economic shocks. In this context, it becomes urgent to develop an appropriate forecast tools. In this article, a computable model of a small open economy with limited export diversification is given. The model allows predicting the dynamics of the main macroeconomic indicators of the country in connection with the export shocks and stabilization policies aimed at mitigating their consequences. This stabilization policy may be expressed in the application of state fiscal, tax, monetary and currency practices to stimulate the economy. Fiscal stimulus is the change in the value of government spending. Raising or lowering taxes, the state may regulate economic activity in the country. Using monetary instruments, financial regulator adjusts the value of the money supply. Carrying out currency intervention, the state can influence the rate of the national currency. All of these tools can be used at the same time state or separately. Experiments using various combinations of these instruments can afford to work out the most appropriate stabilization policy for the state. The proposed model belongs to the class of so-called computable general equilibrium models (CGE). Economic models of this class are based on actual statistics. All the CGE models present a system of equations, the solution of which is the achievement of the overall economic equilibrium. The basis of our computable model is the Mundell-Fleming model. Functional dependences of the Mundell-Fleming model have been given a linear form. The algorithm of proposed computable model has been implemented in a software environment NetLogo.

Keywords

  • • model
  • • small open economy
  • • government regulation
  • • currency exchange rates

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