NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Structural Flexibility: A Partial Ordering

Kala Krishna, Marie Thursby

NBER Working Paper No. 4615
Issued in January 1994
NBER Program(s):   ITI

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.

download in pdf format
   (180 K)

email paper

This paper is available as PDF (180 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4615

Published: Trade, Theory, and Economics: Essays in Honor of John S. Chapman, Melvin, J.R., J.C. Moore, and R. Reizman, eds., London: Routledge, 1999, Chapter 5 (with K.Krishna).

 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us