 Macroeconomic Policy, Exchange-Rate Dynamics, and Optimal Asset AccumulationNo 599, NBER Working Papers from National Bureau of Economic Research, Inc Abstract: The paper develops a model of exchange-rate and current-account determination for a small economy peopled by infinitely lived, utility-maximizing households. In this setting, a central-bank purchase of foreign exchange has no real effects when central-bank foreign reserves earn interest at the world rate and the proceeds are returned to the public. In contrast, an increase in the monetary growth rate does have real effects, even in the long run. The model developed here implies that an increase in government spending may lead to a surplus on current account. The external adjustment process predicted by the model is one in which consumption, real balances, anti external assets all rise or fall simultaneously. Date: 1980-12 Published as Obstfeld, Maurice. "Macroeconomic Policy, Exchange-Rate Dynamics, and Optimal Asset Accumulation." Journal of Political Economy, Vol. 89, No. 6, (December 1981), pp. 1142-1161. Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:0599 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC. |
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