Discussion Papers

No.703 A Global Multi-Sectoral Model in Local Currencies

by Takashi Yano

March 2018


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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