At each period of time t, final good
producers can purchase intermediate goods from both competitive as well as monopolist producers.
We focus on the symmetric equilibrium in which equal amounts of each final good
are produced and a consumer purchases equal amounts of each of the final
When none of the final good
is produced, the upstream technology is at least as good as the integrated technology.
There are five types of agents in our model economy: 1) households, 2) employment agencies, 3) firms producing intermediate goods, 4) firms producing final goods
, and 5) the monetary authority.
The final good
in the home country, Y ([s.sup.t]), is produced using home intermediate goods, [Y.sub.H] ([s.sup.t]), and foreign intermediate goods, [Y.sub.F], ([s.sup.t]), with the following technology:
(12) In this model, outsourcing provides the supplier with better incentives, but integration gives the final good
producer better monitoring opportunities.
As in the baseline sticky-price model, households consume the final good
, intermediate-good producers use labor services in their production process, and final-good producers use the intermediate good in their production of the final good
In the second section of this paper, horizontally differentiated intermediate goods are incorporated into a function for the final good
In accordance with Walras' law, I will only consider the markets of the non-numeraire final good
and intermediate input when totally differentiating eq.
An additional problem, distinct from those already discussed here, is that any normalization of government spending that uses GDP or NI as the denominator of the ratio makes the ratio smaller because a large part (about 55 percent in the years 2010-14) of total government spending--namely, spending for currently produced final goods
and services--is included in both the denominator and the numerator of the ratio.
AUF WIEDERSEHEN 2014 Two figures stand on a platform tears are forming in their eyes They gave each other all their love as they say their final good
byes They were married only two weeks ago But he had received his orders and it was time to go He is off to join his regiment but his bride he has to leave He promises he will write often and this she will believe He boards the train and he tries to smile As he says "do not worry I'll be back in a while" She lifts her head and blows him a kiss But her tears fall down her cheeks as she can't handle this The train moves slowly down the line "Oh!
The latter is modeled as an iceberg cost and is denoted by 1 + [tau], for [tau] > 0, so that a firm must ship 1 + [tau] units of the final good
for 1 unit to reach the foreign market.