U.S. International Capital Flows: Perspectives From Rational Maximizing Models / Robert J. Hodrick.

Format:

Book

Author/Creator:

Hodrick, Robert J.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2729.

NBER working paper series no. w2729

Language:

English

Subjects (All):

Capital market--Mathematical models.

Capital market.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

U.S. International Capital Flows

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1988.

Cambridge, Massachusetts : National Bureau of Economic Research, 1988.

Summary:

This paper examines several aspects of the debate about the causes of the U.S. current account deficit in the 1980's. It surveys several popular explanations before developing two theoretical models of international capital flows. The first model is Ricardian, and it extends the analysis of Stockman and Svensson (1987): The second model is an overlapping generations framework. The major difference in predictions of these two models involves the effects of government budget deficits on the exchange rate and the current account. An update of the empirical investigation of Evans (1986) suggests that his VAR methodology is completely uninformative with additional data. Some empirical results on the importance of risk aversion in modeling international capital market equilibrium are also presented.

Notes:

Print version record

October 1988.