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non-separable preferences à la Shi (1994) under endogenous time preference. This enables us to emphasize a welfare change …
Persistent link: https://www.econbiz.de/10005604488
We study the effects of tax shocks on the budget and external deficits for 16 industrialized countries over the post-1970 period. Our structural approach is based on a small open economy model where a tax cut affects the external deficit by two distinct channels. The demographic channel works...
Persistent link: https://www.econbiz.de/10010587968
We use a quinquennial data set covering 87 countries between 1975 and 2005 to investigate empirically the relationship between fertility and the real effective exchange rate. Theoretically, a country experiencing a decline in its fertility rate can be expected to experience a real depreciation....
Persistent link: https://www.econbiz.de/10005000409
This paper shows the effects of endogenous capital utilization and habit formation in consumption on the predictions of a small open economy model calibrated to Canada. Capital utilization improves the fit of the model by increasing the volatility of output, investment, and hours worked, while...
Persistent link: https://www.econbiz.de/10005770606
This paper examines the optimal appreciation path of an undervalued currency in the presence of speculative capital inflows that are endogenously affected by the appreciation path. A central bank decides its appreciation policy based on three costs: (i) misalignment costs associated with the gap...
Persistent link: https://www.econbiz.de/10008835067
The degree of competition affects the current account response to nominal shocks. The mechanism hinges on the relationship between the mark-up and the degree of real rigidity of prices. In a model with intermediate goods, the degree of real rigidity increases in the mark-up. A weaker response of...
Persistent link: https://www.econbiz.de/10005111407
We set up a standard small open economy business cycle model driven by government spending shocks, neutral productivity (TFP) shocks, and investment-specific shocks. The model is calibrated to quarterly Canadian data and its predicted moments and sample paths are compared with their Canadian...
Persistent link: https://www.econbiz.de/10005466968
We show that recent explanations of the consumption-real exchange rate anomaly that rely on goods and financial market frictions are not robust to introducing just one additional international asset. When portfolios are selected optimally, international trade in two nominal bonds implies a...
Persistent link: https://www.econbiz.de/10011141221
From 1960 to 2009, the U.S. current account balance has tended to decline during expansions and improve in recessions. We argue that shocks to the trend growth rate of productivity can help explain the countercyclical U.S. current account. Our framework is a twocountry, twogood business cycle...
Persistent link: https://www.econbiz.de/10010891628
(1988) preferences to match the countercyclical trade balance observed in open economies, as well as other second moments …, while standard preferences à la King, Plosser, and Rebelo (1988) are commonly labelled `ineffective,' owing to their … inability to yield the countercyclical trade balance. In this paper, I show that an SOE model with standard preferences and …
Persistent link: https://www.econbiz.de/10009369282