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Pareto weights as wedges in two-country models

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Listed:
  • Backus, David
  • Coleman, Chase
  • Ferriere, Axelle
  • Lyon, Spencer

Abstract

In models with recursive preferences, endogenous variation in Pareto weights would be interpreted as wedges from the perspective of a frictionless model with additive preferences. We describe the behavior of the relative Pareto weight in a two-country world and explore its interaction with consumption and the real exchange rate.

Suggested Citation

  • Backus, David & Coleman, Chase & Ferriere, Axelle & Lyon, Spencer, 2016. "Pareto weights as wedges in two-country models," Journal of Economic Dynamics and Control, Elsevier, vol. 72(C), pages 98-110.
  • Handle: RePEc:eee:dyncon:v:72:y:2016:i:c:p:98-110
    DOI: 10.1016/j.jedc.2016.04.003
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    1. repec:red:issued:13-34 is not listed on IDEAS
    2. Epstein, Brendan & Mukherjee, Rahul & Ramnath, Shanthi, 2016. "Taxes and international risk sharing," Journal of International Economics, Elsevier, vol. 102(C), pages 310-326.
    3. Dmitriev, Alexandre, 2017. "Composite habits and international transmission of business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 76(C), pages 1-34.

    More about this item

    Keywords

    Recursive preferences; Consumption and risk-sharing; Real exchange rate;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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