Nontraded goods, market segmentation, and exchange rates
نویسندگان
چکیده
منابع مشابه
Exchange rates and FDI : Goods versus capital market frictions
Economic theory provides two main explanations why changes in exchange rates can affect foreign direct investment (FDI). According to a first explanation, FDI reacts to exchange rate changes if there are information frictions on capital markets and if the investment by firms depends on their net worth (capital market friction hypothesis). According to a second explanation, FDI reacts to exchang...
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Can the presence of nontraded consumption goods or nontraded factors of production explain the high degree of ‘‘home bias’’ displayed by investor portfolios? We find that the answer is no, so long as individuals have access to free international trade in financial assets. In particular, it is never optimal to exhibit home bias with respect to domestic traded-good equities. By contrast, holdings...
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This paper studies how the real exchange rate changes with economic growth. Although Devereux (1999) proves that endogenous growth in the distribution sector can cause exchange rate depreciation, MacDonald and Rucci (2005) empirically find that growth in the distribution sector significantly causes the exchange rate to appreciate. To resolve the discrepancy, we replace perfect competition with ...
متن کاملJump-Diffusion International Asset Pricing with Nontraded Consumption Goods
We present a jump-diffusion international asset pricing model with stochastic exchange rates and inflation rates when investors consume both traded and nontraded goods. We argue that in general, the Adler-Duma inflation rate differential may not capture PPP deviation risks, unless all volatilities, drift rates and jumps rates for price levels, exchange rates and asset returns are constant, and ...
متن کاملExchange Market for Complex Goods: Theory and Experiments
The modern economy includes a variety of markets, and the Internet has opened opportunities for efficient on-line trading. Researchers have developed algorithms for various auctions, which have become a popular means of on-line sales. They have also designed algorithms for exchange markets, which support fast-paced trading of standardized goods. On the other hand, they have done little work on ...
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ژورنال
عنوان ژورنال: Journal of Monetary Economics
سال: 2008
ISSN: 0304-3932
DOI: 10.1016/j.jmoneco.2008.07.011