Since 2014
Terms of Trade and the Current Account under Uncertainty
Economic Analysis Review
View Archive Info| Field | Value | |
| Title |
Terms of Trade and the Current Account under Uncertainty
Terms of Trade and the Current Account under Uncertainty |
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| Creator |
Schmidt-Hebbel, Klaus
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| Subject |
—
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| Description |
Terms of Trade and the Current Account under Uncertainty
This paper analyses the effect of stochastic terms of trade shocks on the current account of a small and open economy. Under uncertainty the distinctions between expected and unexpected, transitory and permanent shocks of the previous perfect foresight literature break down. It is shown that under terms oftrade presenting stochastic structural changes, the rational consumer makes use of an error learning model to form his expectations on the relative prices.In this framework the consumer's optimal plan is derived for a two-good certainty equivalence utility function Finally a simulation for the foreign debt profile in the aftermath of a terms of trade deterioration isperformed. |
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| Publisher |
Universidad Alberto Hurtado - Facultad de Economía y Negocios
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| Contributor |
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| Date |
2010-03-15
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion — — |
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| Format |
application/pdf
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| Identifier |
http://www.rae-ear.org/index.php/rae/article/view/296
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| Source |
Revista de Análisis Económico - Economic Analysis Review; Vol 2, No 1 (1987); 67-89
Revista de Análisis Económico – Economic Analysis Review; Vol 2, No 1 (1987); 67-89 0718-8870 0716-5927 |
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| Language |
eng
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| Relation |
http://www.rae-ear.org/index.php/rae/article/view/296/378
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