Heterogeneous Households, the Distribution of Wealth, and the Laursen-Metzler Effect
AbstractTo study the effects of a terms-of-trade deterioration the paper constructs a dynamic model with heterogeneous households that maximize intertemporal utility. It shows that insofar as this shock leads to a redistribution of wealth--an outcome ignored by the literature because of the representative-agent assumption invariably adopted--it may give rise to an initial current-account deficit and nonmonotonic adjustment paths. The paper also buttresses the argument that heterogeneous-household models help explain the observed "excess smoothness" of consumption. Copyright 1995 by Blackwell Publishing Ltd.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 3 (1995)
Issue (Month): 1 (February)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
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- Cardi, Olivier, 2007.
"Another View Of The J-Curve,"
Cambridge University Press, vol. 11(02), pages 153-174, April.
- Olivier, CARDI, 2005. "Another View of the J-Curve," Discussion Papers (ECON - DÃ©partement des Sciences Economiques) 2005029, Université catholique de Louvain, Département des Sciences Economiques.
- CARDI, Oliver & BERTINELLI, Luisito, 2004. "A formal model of krugman’s intuition on the J-curve," CORE Discussion Papers 2004043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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