Economic Diversification and Growth

Level of Prices
• General Level: g(Pt) = Ω.g(PMt)+(1-Ω)g(PDt) (39)
• Price of domestic products: g(PDt) = Sum[πi.g(Pit)] (40)
• Price by sector of production: g(Pit) = f[g(PC)t,{PXit,PMit},EXMt,CNATt] (41)
• Cost of factors: g(PC)t = f[CWt,CKt] (42)
• Cost of labor: g(CWt) = f[g(CWGt),g(YPt)] (43)
• Cost of capital: g(CKt) = g[(1+δ+g(p*)t).PKt] (44)
• Excess Demand: EXMt = {g(NMMSt/MMDt;g(CG+IG)} (45)
Price of Uses:
• Exported products i: PXit = PWXi.ERt (46)
• Total Exports: g(PXt) = sum[xi.g(PXit)] (47)
• Imported products i: PMit =PWMit(1+tmi).ERt (48)
• Total Imports: g(PMt) = sum[mi.g(PMit)] (49)
• Investment: g(PKt) = θ.g(PMt)+(1-θ).g(PIM&BTPt) (50)
• Consumption: PC= [NY – PX.X+PM.M]/[Y-X+M] (51)
o where: Ω: Share of imports in the total Sources; Θ: Share of imports in the capital good; µi: Share of sector i in the
nominal GDP in (t-1); δ: Depreciation rate of capital goods; tmi :Duties and import taxes; xi:Share of product i in
the value of exports; mi: Share of product i in the value of imports ERt: Nominal exchange rate (USD value in local
currency); PWXit: World price of exported good i (in foreign currency); PWMit: World price of imported good i (in
foreign currency); g(CWGt): Progression of the wage index in the public administration; CNATt: Indicator of natural
shocks over the agriculture sector; (PXi,PMi): Either, export price (exported goods) or import prices (Imported goods);
PIM&BTP: Price of local capital goods “manufacturing and construction”
• Agriculture Products Exports: NGRXAX = ft(NXAX) (a) ou =ft(XAX) ; (b) (52)
• Forest Products Exports: NGRXAFt = ft(NXAF) ; (53)
• Import, Duties and Taxes: NGRMD&T = ft(NMTOT) (54)
• Import, VAT: NGRMTVA = ft(NMTOT) (55)
• Other Indirect Taxes (Domestic): NGRDTVA = ft(NDABS) or (56)
• Tax on Household Income: NGRIRMEN = ft(NY) (57)
139Annexes