The Risky Steady State
Hélène Rey, and
Pablo Winant. 2011. "The Risky Steady State."
American Economic Review,
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.
Article Full-Text Access
Coeurdacier, Nicolas (Sciences Po, Paris)
Rey, Hélène (London Business School)
Winant, Pablo (Paris School of Economics)
E10: General Aggregative Models: General
F41: Open Economy Macroeconomics