In this paper, a model of 'trade shocks' is developed, where all traded goods are used as inputs in their country of destination. The model investigates the impact of increases in world prices of traded inputs on absorption possibilities and the prices of domestic final goods, which are endogenous. The model is used to simulate the impact of 'trade shocks' on the Netherlands, Norway and the United Kingdom.
ASJC Scopus subject areas
- Economics and Econometrics