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The U.S. non-financial corporate sector became a net lender vis-a-vis the rest of the economy in the early 2000s. We document this fact in the aggregate and firm-level data. We then develop a structural dynamic model with investment to study the firms' financing decisions. Debt is fiscally...
Persistent link: https://www.econbiz.de/10011080037
Over the past 25 years there has been a remarkable economic catch-up by scheduled castes and tribes (SC/STs) towards non-SC/ST levels in the terms of their education attainment levels, their occupation choices as well as wage and consumption levels. This is remarkable given the centuries of...
Persistent link: https://www.econbiz.de/10011080079
In this paper we study two long-standing puzzles in the International Finance literature: the fact that the real exchange rate (RER) is very volatile (RER volatility puzzle) and that it covaries negatively with domestic consumption relative to foreign consumption (Backus-Smith puzzle). To...
Persistent link: https://www.econbiz.de/10011080471
This paper explores the nature of consumption risk-sharing within and across countries. A basic prediction of efficient risk sharing is that relative consumption growth rates across countries or regions should be positively related to real exchange rate growth rates across the same areas. We...
Persistent link: https://www.econbiz.de/10011081358
Standard models in open economy macroeconomics predict that an expansionary (contractionary) monetary policy will lead to a currency depreciation (appreciation). Models that generate this prediction include the Dornbusch overshooting model, the flexible price model, the liquidity-effect models,...
Persistent link: https://www.econbiz.de/10011081592
Development of an economy typically goes hand-in-hand with a declining importance of agriculture in output and employment. Given the primarily rural population in developing countries and their concentration in agrarian activities, this has potentially large implications for inequality along the...
Persistent link: https://www.econbiz.de/10011122479
In this paper, we argue that limited asset market participation (LAMP) plays an important role in explaining international business cycles. We show that when LAMP is introduced into an otherwise standard model of international business cycles, the performance of the model improves significantly,...
Persistent link: https://www.econbiz.de/10010871032
Persistent link: https://www.econbiz.de/10005920216
This paper proposes several testing procedures for comparison of misspecified calibrated models. The proposed tests are of the Vuong-type (Vuong, 1989; Rivers and Vuong, 2002). In our framework, the econometrician selects values for model’s parameters in order to match some characteristics of data...
Persistent link: https://www.econbiz.de/10010577509
This paper presents a numerical method for solving stochastic general equilibrium models with dynamic portfolio choice. The method can be applied to models with heterogeneous agents, time-varying investment opportunity sets, and incomplete asset markets. We illustrate the method using a...
Persistent link: https://www.econbiz.de/10010580803