The Effect of Restricting Asset Trade in Dynamic Equilibrium Models
This paper shows that differences between the predictions of an international real business cycle model with complete markets and the predictions of a model where agentscan only trade rsk-free bonds depend heavily on the calibrated values for the degree of persistence in productivity shocks, the discount factor and the degree of international spillovers in productivity shocks. Since empirical work yields point estimates of the degrees of persistence and spillovers in productiv- ity shocks that bear large standard errors, the outcomes of quantitative studies using only the point estimates of these parameters inherit the substantial uncertainty associated with the empirical estimates.
|Date of creation:||Feb 2002|
|Contact details of provider:|| Postal: 1280 Main Street West, Hamilton, Ontario, L8S 4M4|
Phone: (905) 525-9140 ext. 22765
Fax: (905) 521-8232
Web page: http://www.economics.mcmaster.ca/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:mcm:deptwp:2002-02. 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: ()
If references are entirely missing, you can add them using this form.