The Risky Steady State

Nicolas Coeurdacier; Hélène Rey; Pablo Winant

doi:10.1257/aer.101.3.398

American Economic Review Vol. 101 No. 3 2011

The Risky Steady State

Nicolas Coeurdacier¹; Hélène Rey²; Pablo Winant³

¹ Department of Economics, SciencesPo, 28 rue des Saint-Pères, 75006 Paris, and CEPR. · ² London Business School, Regent's Park, London, NW1 4SA, CEPR, and NBER. · ³ Paris School of Economics, 48 bis, rue de la Gare de Reuilly, 75012 Paris.

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Abstract

We propose a simple quantitative method to linearize around the risky steady state of a small open economy. Unlike when the deterministic steady state is used, the net foreign asset position is well defined. We allow for stochastic income and stochastic interest rate.

DOI: 10.1257/aer.101.3.398
Volume: 101
Issue: 3
Pages: 398-401
Language: en
Sources: bibtex:phds-export.bib openalex crossref

The Risky Steady State

Abstract

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