ABSTRACT
As in the case of a closed economy, three types of exogenous change are considered: changes in demand preference, factor accumulation and technical change. In a closed economy and an open economy with variable terms of trade, capital unambiguously loses both in terms of numéraire income and utility. The case of technical improvement must be considered in the context of an open economy. In the context of an open economy technical progress in one industry implies either an increased or decreased dependence on foreign trade according to whether such change occurs in the import or export commodity. The analysis of parametric change in an open economy has an important application to a problem of considerable past and present—the effect of economic growth on international trade. The analysis of a change in budgetary scale in a closed economy where the real resource transfer to government is financed by a general tax.
