A Global Multi-Sectoral Model in Local Currencies

Discussion Papers

No.703

by Takashi Yano

March 2018

ABSTRACT

Economic agents make their decisions by focusing on the economic performance of their economies in their currencies rather than in a foreign currency. This shows that a multi-country economic model in local currencies is suitable to analyze global economic issues. However, international input-output tables are denominated in a specific currency such as the US dollar. Employing the OECD Intercountry Input-Output Tables, this paper presents a method to convert the international input-output tables in U.S. dollars and current prices to those in local currencies and constant prices. In addition, the structure of a global model with economies of scale and imperfect competition is illustrated. A numerical example is also demonstrated in order to show the applicability of the model.

Keywords:  global multi-country model; exchange rate; local currency

JEL classification: C54, D57, D58, F47

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