Abstract
The Barro-Grossman-Malinvaud model of fixed-price equilibrium is extended to a two-country model of trade with a fixed exchange rate. There are various possible types of fixed-price equilibria for the international economy, depending on the structure of rationing. The existence and uniqueness of one type of fixed-price equilibrium are proved. Indeed the extension of ‘the simple macroeconomic model’ to a two-country economy allows a new treatment of the problem of uniqueness of the type of fixed-price equilibrium. At last, some comparative statics results are derived. Among others the model allows to meet on new grounds (i.e., with some microfoundations) some well known results of the conventional Keynesian approach. But much more general results can be derived, applying to a class of market states not already dealt with in international-trade theory.
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