ABSTRACT
In Part III of this book, beginning with this chapter, we return to the modeling of open economy dynamics. We begin with a study of the capital account and the budget dynamics in an open economy. We thus, among others, deal with the twin de“cit. Many modeling aspects are pursued under the assumption of a perfectly open economy. We also touch upon “scal and monetary policy in the perfect open economy. Since we now use a number of new notations it is worth summarizing those notations in the separate section below.
