num_pages: 384
description: This book develops macroeconomic theory for small open economies characterized by the sort of controls which make much of existing neoclassical economics inapplicable to developing countries. It distinguishes between sustainable combinations of policies and incompatible control regimes. Theauthors analyze the changes needed to maintain compatibility and the consequences of failing to do so. They also consider optimal investments in response to a temporary shock. The second half of the book contains an analysis of two temporary trade shocks in Africa, in both compatible andincompatible control regimes, demonstrating the applicability of the theory. It shows that in a compatible regime, the regime and the fiscal response to changes in revenue may make the reaction to a shock grossly inefficient. Under incompatibility, an economy exposed to a negative shock may go intosteep decline, while responses to conventional policies may be reversed.
language: English
title: Controlled Open Economies: A Neoclassical Approach to Structuralism
publisher: Oxford University Press