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Stationarity-inducing techniques in small open economy models with collateral constraints
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Dimakopoulou, Vasiliki (2021) Stationarity-inducing techniques in small open economy models with collateral constraints. Open Economies Review, 32 . pp. 725-738. doi:10.1007/s11079-020-09607-1 ISSN 0923-7992.
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Official URL: https://doi.org/10.1007/s11079-020-09607-1
Abstract
I show that the alternative stationarity-inducing techniques that have been used to “close” the standard small open economy model (like an endogenous discount factor and a debt-elastic interest rate premium) have different implications for the equilibrium dynamics once I add a commonly-used collateral-type financial constraint. Given this non-equivalence, my results further show that a small open economy model with a credit constraint that embodies an endogenous discount factor is superior to the debt-elastic interest rate model when one tries to match this kind of models to the data.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Macroeconomics, Loans, International finance | ||||||||
Journal or Publication Title: | Open Economies Review | ||||||||
Publisher: | Springer | ||||||||
ISSN: | 0923-7992 | ||||||||
Official Date: | September 2021 | ||||||||
Dates: |
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Volume: | 32 | ||||||||
Page Range: | pp. 725-738 | ||||||||
DOI: | 10.1007/s11079-020-09607-1 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||
Date of first compliant deposit: | 12 November 2020 | ||||||||
Date of first compliant Open Access: | 18 December 2020 | ||||||||
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