Househoold Heterogeneity and Real Exchange Rates  

Oleh:

Kocherlakota, Narayana R. ; Pistaferri, Luigi

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 117 no. 519 (Mar. 2007), page C1-C25.
Topik: households; household; heterogeneity; exchange rates
Fulltext: C1.pdf (643.65KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.25 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We assume that individuals can fully insure themselves against cross - country shocks but not against individual -specific shocks. We consider two particular models of limited risk - sharing : domestically incomplete markets (DI) and private information – Pareto optimal (PIPO) risk - sharing. For each model, we derive a restriction relating the cross - sectional distributions of consumption and real exchange rates. We evaluate these restrictions using household - level consumption data from the US and the UK. We show that the PIPO restriction fits the data well when households have a coefficient of relative risk aversion of around 5. The restrictions implied by the complete risk - sharing model and the DI model fare poorly.

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