Premium
GENERAL EQUILIBRIUM OF A REGIONAL ECONOMY WITH A FINANCIAL SECTOR–PART I: AN ACCOUNTING FRAMEWORK WITH BUDGET AND BALANCE SHEET LINKAGES
Author(s) -
Hughes Merritt
Publication year - 1991
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1991.tb00156.x
Subject(s) - balance of payments , balance sheet , economics , general equilibrium theory , capital account , balance (ability) , capital flows , macroeconomics , finance , microeconomics , profit (economics) , medicine , physical medicine and rehabilitation
. An accounting framework is presented that can be used as a basis for a regional general equilibrium economic model that meaningfully incorporates both real and financial activity. The accounting framework describes a circular flow from regional income to credit base, and back to regional income, including the balance of payments identity. Both real market transactions and capital stock changes are explicitly recognized. Linkages between real activity flows and sectoral balance sheets are highlighted. Financial activity is recognized as a service, and all assets are assumed to be valued at market prices.