AUTONOMOUS NET EXPORTS: Net exports by the foreign sector that do not depend on income or production (especially national income or gross domestic product). That is, changes in income do not generate changes in net exports. Autonomous net exports are best thought of as net exports that the foreign sector undertakes independent of income. They are measured by the intercept term of the net exports line. The alternative to autonomous net exports is induced net exports, which do depend on income.Autonomous net exports are net exports by the foreign sector that are unrelated to and unaffected by the level of income or production. This is one of two basic classifications of net exports. The other is induced net exports, net exports that are based on the level income or production. In other words, net exports can be divided into: (1) expenditures on final goods which are undertaken by the foreign sector regardless of the level of aggregate production and (2) an adjustment of expenditures (more or less) that results because aggregate production and income changes. While autonomous net exports are unaffected by income and are held constant for the construction of the net exports line, they are not absolutely constant, they do change. Autonomous net exports are affected by an assortment of factors and influences--net exports determinants--such as foreign currency exchange rates, global economic conditions, and trade policies. Changes in these determinants cause changes in autonomous net exports, which shift the net exports line as well as the aggregate expenditures line and disrupt whatever equilibrium might exist. Net exports are commonly assumed to be totally autonomous in the introductory analysis of Keynesian economics. That is, any induced net exports that might realistically exist are ignored. Doing so not only simplifies the analysis, but also places the focus on how and why autonomous net exports change, and how such changes affect the macroeconomy. More sophisticated, and realistic, analysis then includes induced net exports. Exports Minus ImportsNet exports are the difference between exports and imports, or exports minus imports. Exports are goods produced by the domestic economy and purchased by the foreign sector. Imports are goods produced by the foreign sector and purchased by the domestic economy (that is, the domestic household, business, and government sectors).The amount of exports sold to the foreign sector is theoretically and realistically unaffected by the level of domestic income or production. That is, exports are totally autonomous. They are affected by what transpires in the foreign sector not in the domestic economy. For example, an increase in U.S. national income is NOT going to induce a change in exports. In contrast the amount of imports purchased from the foreign sector is induced by the level of domestic income and production, as well as an autonomous component. As such, autonomous net exports is the combination of autonomous exports and autonomous imports. Or better yet, autonomous exports minus autonomous imports. Autonomous: An EquationOne way to provide an illustration of autonomous net exports (and the relation to induced net exports) is with a general linear net exports equation, such as the one presented here:where: NX is net exports, Y is income (or aggregate production), m is the intercept, and n is the slope. As with any linear equation, the two key parameters that characterize this net exports equation are slope and intercept. Autonomous net exports are indicated by the intercept of the net exports equation. Induced net exports are then indicated by the slope.
Autonomous: A Line
Because net exports are the difference between exports and imports, this line can be divided into its two component parts--exports and imports.
Net Exports DeterminantsAutonomous net exports, like other autonomous expenditures, are important to Keynesian economics not because they are unaffected by income, but because the ARE affected by a host of nonincome factors, especially foreign currency exchange rates, global economic conditions, and foreign trade policies. These nonincome influences on net exports are termed net exports determinants.These determinants, similar to those for other relations in the study of economics, cause a change in the underlying net exports-income relation. From a graphical perspective, these determinants cause the net exports line to shift, which effectively means that the intercept of this line changes. More generally, these determinants cause a change in autonomous net exports. Three of the more important net exports determinants are:
Other Autonomous ExpendituresNet exports are one of four expenditures on aggregate production in the macroeconomy. The other three--consumption expenditures, investment expenditures, and government purchases--also have important autonomous components. While autonomous net exports can be a source of business-cycle instability, the autonomous components of these other expenditures (especially investment) are generally more important in Keynesian economics.
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