English, Article, Journal or magazine article edition: International Lending and Borrowing in a Stochastic Sequence Equilibrium Richard H. Clarida

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Bookmark: http://trove.nla.gov.au/version/141897
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • International Lending and Borrowing in a Stochastic Sequence Equilibrium
Author
  • Richard H. Clarida
Physical Description
  • preprint
Notes
  • The objective of this paper is to study international lending and borrowing in general equilibrium framework in which countries are subject to stochastic productivity fluctuations. The role of time preference, borrowing limits, and lump sum taxation are rigorously analyzed, yielding results which enrich those obtained in the existing literature.
  • International lending and borrowing, stochastic productivity fluctuations
  • RePEc:cwl:cwldpp:771
  • This paper is a theoretical investigation of international lending and borrowing in the context of a general equilibrium model in which national productivities are subject to random fluctuations and rates of time preference differ among countries. International capital flows arise from the efforts of risk-averse households situated in different countries to self-insure against random productivity fluctuations. We establish the existence of a rational expectations equilibrium in which the world interest rate is constant and strictly less than the rate of time preference of the least impatient countries. The rate of time preference, solvency restrictions on borrowing, and balanced-budget fiscal policies are rigorously analyzed.
  • RePEc:nbr:nberwo:1944
Language
  • English
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