International Lending and Borrowing in a Stochastic, Stationary Equilibrium

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International Lending and Borrowing in a Stochastic, Stationary Equilibrium

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Clarida, Richard H

Abstract

This paper develops a simple general equilibrium model of international borrowing and lending in which national products are subject to random fluctuations. International capital flows arise from the efforts of risk-averse households in different countries to self-insure against random income fluctuations by accumulating foreign claims that can be used to finance a less-variable profile of consumption relative to national income. In the absence of aggregate uncertainty, a stationary, rational expectations equilibrium is shown to exist, despite the fact that rates of time preference differ among countries. A number of results, many of which enrich those in the existing literature, are obtained. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 31 (1990)
Issue (Month): 3 (August)
Pages: 543-58
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Handle: RePEc:ier:iecrev:v:31:y:1990:i:3:p:543-58

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Karen K. Lewis, 1997. "Are Countries with Official International Restrictions "Liquidity Constrained?"," NBER Working Papers 5991, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Kraay, Aart & Ventura, Jaume, 1997. "Current accounts in debtor and creditor countries," Policy Research Working Paper Series 1825, The World Bank. [Downloadable!]
Other versions:
- Kraay, A. & Ventura, J., 1997. "Current Acounts in Debtor and Creditor Countries," Working papers 97-12, Massachusetts Institute of Technology (MIT), Department of Economics.
- Aart Kraay & Jaume Ventura, 2000. "Current Accounts In Debtor And Creditor Countries," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1137-1166, November. [Downloadable!] (restricted)
Jianjun Miao, 2003. "Competitive Equilibria of Economies with a Continuum of Consumers and Aggregate Shocks," Macroeconomics 0310001, EconWPA. [Downloadable!]
Other versions:
- Miao, Jianjun, 2006. "Competitive equilibria of economies with a continuum of consumers and aggregate shocks," Journal of Economic Theory, Elsevier, vol. 128(1), pages 274-298, May. [Downloadable!] (restricted)
Fabio Ghironi, 2000. "Macroeconomic Interdependence under Incomplete Markets," Boston College Working Papers in Economics 471, Boston College Department of Economics, revised 07 Feb 2003. [Downloadable!]
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- Ghironi, Fabio, 2006. "Macroeconomic interdependence under incomplete markets," Journal of International Economics, Elsevier, vol. 70(2), pages 428-450, December. [Downloadable!] (restricted)
Paul Hiebert & Javier J. Pérez & Massimo Rostagno, 2002. "Debt reduction and automatic stabilisation," Economic Working Papers at Centro de Estudios Andaluces E2002/12, Centro de Estudios Andaluces. [Downloadable!]
Other versions:
- Paul Hiebert & Massimo Rostagno & Javier J. Perez, 2002. "Debt reduction and automatic stabilisation," Working Paper Series 189, European Central Bank. [Downloadable!]
Karen K. Lewis, 1996. "Consumption, Stock Returns, and the Gains from International Risk-Sharing," NBER Working Papers 5410, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)

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