Portfolio substitution and exchange rate volatility
Article Abstract:
The effects of frictions such as legal and institutional changes can facilitate easier adjustments on foreign exchange portfolios, producing concerns that exchange rates may become more unstable. An equilibrium model with alternate degrees of portfolio substitutability is presented to analyze the effects of frictions. Results indicate that exchange rate volatility increases as portfolios become more substitutable when preferences are nearly log linear or when transaction costs are minimum. However, volatility is not significantly affected by substitutability in the presence of empirically reasonable parameter values.
Publication Name: Journal of Monetary Economics
Subject: Economics
ISSN: 0304-3932
Year: 1997
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Intergenerational earnings mobility, inequality and growth
Article Abstract:
A model was analyzed to determine the relationship of per capita income, inequality, intergenerational mobility and education returns. The model revealed the likelihood of multiple equilibria in which two economies end up with different steady states. Such condition results due to variation in initial wealth distribution despite similarity in technology parameters and taste.
Publication Name: Journal of Monetary Economics
Subject: Economics
ISSN: 0304-3932
Year: 1998
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