Flowcharts

Goods and input factors within an area

• Two production sectors: local and exporting

• Commodity inputs

Trade linkages

• Each area needs a specific composition of its imports

• The composition (aggregation) is price sensitive

• Bilateral trade relationships exist, can be e.g. subjected to area specific import tariffs

Debt finance linkages

• Each ares can enter a positive or negative debt position with the rest of the world

• All area positions are cleared throgh a zero net supply assumption worldwide

• No bilateral debt relationships

Equite finance linkages

• Each area's residents hold a fixed proportion of each other area's claims on production capital

• No price-elastic changes in demand for these claims exist