| Abstract: | Within the framework of a four-sector macroeconomic model for Thailand, comparative statics are used to assess alternative ways of macroeconomic adjustment. Fiscal policy interventions, manipulations of the exchange rate, and productivity improvements are discussed. Their implications in terms of income generation, external deficit, and inflation are derived. It is shown that only productivity improvements have positive effects on all indicators. Fiscal interventions lead to an improvement in the external deficit, but at the cost of income generation. The outcome of a devaluation is largely dependent on the behavior of factor prices. |
