Comments on Obstfeld and Rogoff's "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?" / Charles Engel.

Format:

Book

Author/Creator:

Engel, Charles.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7818.

NBER working paper series no. w7818

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Comments on Obstfeld and Rogoff's "The Six Major Puzzles in International Macroeconomics

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

The paper offers comments on Obstfeld and Rogoff (2000). The comments primarily focus on three issues: (a) How do we reconcile the numerical examples of OR, which show quantitatively plausible resolutions to the major puzzles arising from costs of trade, with previous studies that have found trade costs do not get us very far? (b) Does the solution proposed by OR solve the puzzles at the expense of introducing new puzzles? That is, does their solution have counterfactual implications for other economic relationships? (The prime example of what I have in mind here is what OR call the Backus-Smith puzzle'.) (c) Some of the problems connected with points (a) and (b) can be rectified by moving away from the assumption of complete asset markets. But, then, how do we assess how much of the solution to the puzzle is coming from trade costs versus capital-market imperfections?

Notes:

Print version record

July 2000.