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Equilibrium on International Assets and Goods Markets

Author

Listed:
  • Patrice Fontaine

    () (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS - Centre National de la Recherche Scientifique - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes)

  • Cuong Le Van

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics, University of Exeter Business School - University of Exeter Business School)

Abstract

Most of the international asset pricing models are developed in the situation where purchasing power parity (PPP) is not respected. Investors of different countries do not agree on expected security returns. However, in this case, an equilibrium on the international assets market may exist but not on the international goods market. Our purpose in this paper is to give conditions under which we have equilibrium, not only on the international assets markets but also on the international good market. More precisely, we focus on the link between no-arbitrage, equilibrium and PPP. At equilibrium, assets markets must clear and international goods market balance. In particular, equilibrium goods prices respect the PPP.

Suggested Citation

  • Patrice Fontaine & Cuong Le Van, 2010. "Equilibrium on International Assets and Goods Markets," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00523364, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00523364
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00523364
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