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Compare and contrast the effects of a domestic-led expansion (due to a change in G or T) versus an export-led one (due to a change
Compare and contrast the effects of a domestic-led expansion (due to a change in G or T) versus an export-led one (due to a change in Y* or a currency devaluation) in a short-run open economy Keynesian model, such as the one in Chapter 18. (a) Show the impacts on NX and Y (qualitative only). Use graphs. (b) How are the qualitative effects similar or different? Explain in words. (c) Why do the differences matter for policy purposes?
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