The first part shows how economic sectors can be classified as tradables and non-tradables, how variables of national accounts can be divided into this two-sector economy. Based on this, precise consumption ratio and price ratio (real exchange rate) between tradable to non-tradables can be computed and used for calculation of the elasticity of substitution in consumption using a CES function and time series econometrics. The second part shows how an economy can be divided into tradables and non-tradables but with three goods: exports, imports and domestic production. It is then...