Foreigh Asset Accumulation and Macroeconomic Policies

Liutang Gong and Heng-Fu Zou ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we have studies the effects of macroeconomic policies on foreign asset accumulation in a wealth effect model used by Bardhan (1967), Kurz (1968), Calvo (1980) and Blanchard (1983). Our results differ dramatically from the ones in Obstfeld (1981). In particular, we have shown that government spending always reduces foreign asset accumulation (or increases foreign borrowing). While Obstfeld's model turned the conventional Mundell-Fleming model on its head, our wealth effect approach has restored its validity.

Keywords: Foreigh Asset Accumulation; Becker's Time Preference; Macroeconomic Policies (search for similar items in EconPapers)
JEL-codes: B22 E58 E63 (search for similar items in EconPapers)
Date: 2012-01-02
New Economics Papers: this item is included in nep-mac
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