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Productivity and Preferences in a Small Open Economy

  • Chadha, J. S.
  • Janssen, N.
  • Nolan, C.Author-X-Name-First: C.

Following Hall (1997) it is increasingly common to incorporate preference, as well as productivity, perturbations in calibrated general equilibrium models. We assess the performance of a small open economy stochastic growth model (based on the Blanchard-Yaari framework) under alternate driving processes. Whist both models provide familiar descriptions of the aggregate economy, we find that the model driven by productivity disturbances has clear advantages in explaining the behaviour towards foreign asset accumulation.

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File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/wp0108.pdf
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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0108.

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Length: 29
Date of creation: Jun 2001
Date of revision:
Handle: RePEc:cam:camdae:0108
Note: Ma
Contact details of provider: Web page: http://www.econ.cam.ac.uk/index.htm

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  9. Carlstrom, Charles T. & Fuerst, Timothy S., 1995. "Interest rate rules vs. money growth rules a welfare comparison in a cash-in-advance economy," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 247-267, November.
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  16. Cardia, Emanuela, 1991. "The dynamics of a small open economy in response to monetary, fiscal, and productivity shocks," Journal of Monetary Economics, Elsevier, vol. 28(3), pages 411-434, December.
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