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In conventional models of the open economy, the impact on the trade balance of a change in the terms of trade depends upon whether the Marshall-Lerner condition on demand elasticities is satisfied. This paper shows that, in a model which incorporates rational savings behavior, the link between...
Persistent link: https://www.econbiz.de/10005368384
Psychological evidence indicates that a person's well-being depends not only on his current consumption of goods, but on a reference level determined by his past consumption. According to Kahneman and Tversky's (1979) prospect theory, people care much more about losses relative to their...
Persistent link: https://www.econbiz.de/10005368158
The economics literature offers competing hypotheses about the relationship between savings rates and output variability. This paper examines data for eight industrial countries to determine if there is a discernible pattern between savings rates and cyclical volatility of output. We find a...
Persistent link: https://www.econbiz.de/10005368180
The financial intermediary is shown to result from a market imperfection related to the costly monitoring of the actions of consumers. In such an environment complete insurance is not obtainable and consumers respond by holding some of their wealth as precautionary balances in order to...
Persistent link: https://www.econbiz.de/10005712642
Most households persistently invest in riskless assets but not stocks, and may do so because they perceive the information required for market participation to be costly relative to expected benefits. In a CCAPM, increased risk aversion, income risk, and lower resources reduce the information...
Persistent link: https://www.econbiz.de/10005712788
Persistent link: https://www.econbiz.de/10005712811
The literature on asset accumulation by households draws a sharp distinction between "short-run" precautionary motives to buffer annual consumption from annual labor income shocks, and "long-run" life cycle considerations under labor income certainty. However, empirical estimates of the...
Persistent link: https://www.econbiz.de/10005498861
We will examine the size of the Feldstein and Horioka (1980) "saving-retention coefficient" in a setting of near perfect capital mobility, Japanese regions. We first find that on total regional saving and investment rate data, inclusive of regional government saving and investment, the estimate...
Persistent link: https://www.econbiz.de/10005498890
Japanese government planners use the average age of the manufacturing capital stock as one measure of their country's international "competitiveness." Compared to the U.S., the data show that Japanese depreciation rates are higher and that capital stocks are younger. ; In much of economic...
Persistent link: https://www.econbiz.de/10005498895
A broad array of domestic institutional factors--including problems with the originate-to-distribute model for mortgage loans, deteriorating lending standards, deficiencies in risk management, conflicting incentives for the GSEs, and shortcomings of supervision and regulation--were the primary...
Persistent link: https://www.econbiz.de/10008852837