The Composition of Government Spending and the Real Exchange Rate

the composition of government spending and the real exchange rate  13

Appendix B: Sectoral Equations of Motion

The equations governing sectoral output and consumption behaviour are given by

1

YT = —At
αL

^βL Y
aL,(1 - γ) + β LY

^{rB +} [GGN ^- (GTŋ

+ ^aZ Z
αL

YN = An + ^βK At +
αL

^aL(^βK ^{+ β}L^{)(1 - γ})
^aL(^{1 -} Y) ^{+ β}LY

rB + [G N — G τ ]J +

^aZ^βK ^{+ a}L^βZ Z
aL

*

C^N

ɪ , +   ^aL^{(1 - γ} )

aL     aL (1 - Y) + β_LY

rB — [G τ +

^βLY
aL,(1— γ)

ʌ
gGt ]

+ ^aZ Z
aL

^aL(^βK ^{+ β}L)(^{1 - γ})    ^ [Λ .

aL (1 — Y) + βLY Г ^{- [Gt +}

+An + ^βK At + ^{az β}K ^{+ a}L^βz Z
aL         aL

^aL(^{1 - β}K ^{- β}L)^{(1 - Y}) ^{+ β}L^yG ]
aL(βL + βK )(1 — Y)       N^]

(B.1)

(B.2)

(B.3)

(B.4)