We develop a dynamic general equilibrium model to analyze the macroeconomic effects of a shift in portfolio preferences of foreign investors. The general equilibrium nature of the model lets any adjustment in interest rates and asset prices be determined endogenously, as asset demands react to changes in the relative expected returns of different assets. However, we find no evidence that providing financing in excess of domestic saving is the channel through which financial integration delivers its benefits. In contrast, under flexible prices, labor income and the profits of the domestic firms are positively correlated. This study measures the proportion of real exchange rate movements that can be accounted for by movements in the relative price of non-traded goods among twenty-one bilateral Asian-Pacific real exchange rates.
The report analyzes the nature of these imbalances, which occur when some countries, such as the United States, run large current account essentially trade deficits while others, such as China, maintain large surpluses. These questions and the way the international financial community will resolve them, will have a huge impact in the functioning of the international monetary system. Two contemporary issues provide reason to focus on national saving and investment: the debate over public pensions, and pensions more generally, in all rich countries; and the large global current account imbalances, conceptually the difference between national savings and domestic investment. In particular, relative prices of non-traded goods appear to account for virtually none of the movement of Pacific Rim real exchange rates. The general equilibrium nature of the model allows for endogenous adjustment in interest rates and asset prices. Este artículo examina los actuales desbalances de la economía mundial, en particular el déficit de cuenta corriente de Estados Unidos y sus implicancias para el ajuste del tipo de cambio.
The paper presents empirical evidence based on the U. Imports and Exports, 1980-2005; 4. Moreover, the deficit is on track to become substantially larger over the next several years. This condition seems plausible given the well-documented importance In any case, the forward premium puzzle may no longer exist. Approaching the other: the four projects of western domination.
There are two types of representative households: entrepreneurs and portfolio investors. Are we all saving enough to provide adequate retirement income for rapidly ageing populations — especially Americans, whose household savings seems to have disappeared altogether in 2005? A test of current account sustainability suggests that the U. However, the one exception the Hong Kong dollar is anomalous compared to other managed currencies within the sample, and to the recent findings of Mendoza 2000. Cenné informace by Vám také mohli poskytnout na dalších vysokých školách ekonomického zaměření: Vysoká škola ekonomická , Ekonomicko-správní fakulta Masarykovy univerzity v Brně , Vysoká škoa, finančí a správní - přehled dalších škol s ekonomickým zaměřením na adrese. Aggregate consumption decreases in both regions on impact. Therefore, manufacturing exports to the U.
Current Account Sustainability 107Curcuru, Stephanie E. In addition, we follow Meredith and assume that the government consumes only the domestic good. Department of the Treasury, Federal Reserve Bank of New York, and Board of Governors of the Federal Reserve System. Net International Investment Income, 1977-2005; 13. The accounting is performed with five different measures of non-traded goods prices and real exchange rates, for exchange rates of the U. We treat these changes to portfolio preferences as permanent shocks.
Thus, the game can facilitate discussions in a number of economics courses. We follow Meredith 2007 in assuming that taxation is lump-sum in order to abstract from distortionary effects on capital accumulation. The work makes a number of original contributions, notably in the geometrical treatment of domestic production, of the balance of. The focus is on the effects of the horizon index on the economy. Allowing for such an extension attenuates quite significantly the implied exchange rate adjustment. External Assets and Liabilities, 1953-2004; 11.
Fashion, beauty, animals, sports, the home, the clergy, scholars - all are assessed for their true usefulness and found wanting. This paper critically examines explanations for the slide in the euro, finding that many are questionable on conceptual or empirical grounds. The development and use of forward-looking macromodels in policy making institutions has proceeded at a much slower pace than what was predicted in the early 1980s. The paper discusses thetension between these two aspects of the dollar assessment, and what factors can helpreconcile them. The forward premium is a notoriously poor predictor of exchange rate movements. However, a comparison to other countries reveals that the U. The model could also be extended to study quantitative easing.
Responsibility: prepared by Guy Meredith. The next three sections study the effects and the role of fiscal policy. In response to technology shocks, sticky prices generate a negative correlation between labor income and the profits of domestic firms, biasing portfolios in favor of home equities. We show that the planning horizon of consumers, access to financial markets, and the elasticity of labor supply, as well as the characteristics of utility and production functions, and the degree of competition are all critical for determining the impact of fiscal policy. Home and foreign portfolios are not identical in equilibrium. Our evidence suggests that net capital gains are a more potent channel of risk sharing.
The impact of financial leverage on welfare is also sensitive to the extent of exchange rate pass-through and the substitutability between goods produced in different countries. This paper analyzes various indicators of the U. In the context of our model, this policy can be seen as an increase in the share of wealth invested domestically α , and a reduction in the fraction of this wealth invested in equities β. Firms adjust their productive capacity by deciding the optimal amount of physical investment, I t, so as to maximize current and future cash flows. One possible explanation could be that the Asian crisis created a large pool of savings searching for relatively riskless investment opportunities, which were provided by deep, liquid, and innovative U.