This paper attributes the exchange-rate disconnect puzzle, which we characterize as the low adjusted R-squared in short-horizon predictive regressions, to omitted `third-country' variables. Using a three-country DSGE exchange rate model, we identify channels through which shocks originating in...

This paper studies the effect that changing demographic patterns have had on the house- hold saving rate in China. We undertake a quantitative investigation using an overlapping generations (OLG) model where agents live for 85 years. Consumers begin to exercise deci- sion making when they are...