Quarterly Journal of Economics Vol. 95 No. 2 1980
A Model of International Trade and Finance
Abstract
An equilibrium model of international trade, payments, and financial asset flows is developed with implications for the relationship between asset returns and changes in the relative prices of consumption goods of different countries. The model focuses on international trade as enlarging the opportunity for intertemporal exchange. The main source of uncertainty in the model is revisions of investors' expectations of the profitability of country-specific capital. The model is extended to include money to demonstrate how international monetary agreements may affect individual portfolio decisions.
- DOI
- 10.2307/1885500
- Volume
- 95
- Issue
- 2
- Pages
- 277
- Sources
- openalex crossref