Macroeconomic interdependence under incomplete markets

• 成果类型: Article
• 署名作者: Ghironi, Fabio
• 署名单位: Boston College
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2005.12.006
• 发表日期: 2006
• 页码: 428-450
• 关键词: current account; incomplete markets; net foreign assets; ricardian equivalence; stationarity

摘要

This paper uses a two-country, flexible-price model with overlapping generations of infinitely lived households to study the role of net foreign asset dynamics in the propagation of productivity shocks. Absence of Ricardian equivalence ensures existence of a unique steady-state level of net foreign assets, to which the economy returns following temporary shocks. Model dynamics are significantly different from those of a setup in which terms of trade movements perform all the international adjustment and net foreign assets do not move. The difference relative to a complete markets economy in which net foreign asset movements play no role in shock transmission is smaller. It is amplified if the substitutability across goods rises and if shocks are permanent. (c) 2006 Elsevier B.V. All tights reserved.