La macroeconomí­a de una economí­a abierta: el mercado de trabajo y la oferta agregada

In this paper we study the operation of the labor market, and a curve of aggregate supply is derived, for the cases of closed and open economy, in the short, medium and long term. In an open economy, an important part of the production costs is derived of the use of imported inputs in the fabrication of the products. Therefore, the domestic price level, besides depending on the level of the nominal wage, is also associated to factors like the exchange rate or to the international price of imported inputs. In the short term, since the nominal wage and the exchange rate are independent of the activity level, the price level is constant and therefore the aggregate supply is perfectly elastic. In the medium term, an increment of the level of economic activity, reduces the unemployment rate and produces an increment of the wages, that elevates the costs of production of the companies and the price level of the economy. Therefore, firms are willing to offer a larger production but at a higher price level. In the long term, prices do not affect the level of economic activity, which implies that the aggregate supply is perfectly inelastic. After presenting the different versions of the aggregate supply, we carry out exercises of comparative static to show the effects on aggregate supply of a technological change and an increment of the international price of petroleum.