IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

On Consumption, Investment and Risk

Listed author(s):
  • Francisco Venegas-Martínez


    (División de Economía, Centro de Investigación y Docencia Económicas, A. C. (CIDE). México, D.F. Mexico)

The Mexican episode of 1992-1994 was characterized by a steep rise in consumption accompanied by a sharp fall in investment. This paper provides an explanation of the negative response of investment to political risk, as occurred in Mexico between 1992 and 1994. It is assumed that, inside an adjustable band, the expected rate of depreciation is driven by a mixed diffusion-jump process and the expected real rate of return on an international bond is governed by a diffusion process, both processes being correlated. This paper analyzes a small open stochastic economy. Two cases are considered: i) a cash-in-advance, Ramsey-type economy, and ii) a Sidrauski-type economy.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Article provided by in its journal Economia Mexicana NUEVA EPOCA.

Volume (Year): IX (2000)
Issue (Month): 2 (July-December)
Pages: 227-244

in new window

Handle: RePEc:emc:ecomex:v:9:y:2000:i:2:p:227-244
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:emc:ecomex:v:9:y:2000:i:2:p:227-244. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ricardo Tiscareño)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.