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The Role of Uncertainty in a Simple Temporary Equilibrium Model of International Trade with Quantity Rationing under Fixed Exchange Rates
Schittko, Ulrich K. | Eckwert, B.
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 103 (1983), Iss. 5 : pp. 461–483
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Schittko, Ulrich K.
Eckwert, B.
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Abstract
In a two period model of temporary equilibrium with quantity rationing and international trade under fixed exchange rates expectations concerning future prices and constraints play a significant role in classifying the effective equilibria and for the results of comparative statics. If the production sector can hold inventories (as in our model), the expectational structure influences significantly the sales but not the production and labor demand decisions. This surprising result depends on the way the production process is modelled, revealing the role of an atemporally formulated production structure