Investment, the current account, and the relative price of non-traded goods in a small open economy

Current Account, Capital Formation and Terms of Trade Shocks: a Revisit of the Harberger-Laursen-Metzler Effect

“…It has been clearly demonstrated by several studies (Persson and Svensson, 1985;Brock, 1988Brock, , 1996Matsuyama, 1987Matsuyama, , 1988Buiter, 1989;Turnovsky, 1989a, 1989b), that that both investment behavior and savings behavior are crucial to the understanding of different exogenous shocks on the current account; thus, we extend the simple model by introducing production and capital accumulation functions into the model.…”

“…Implications of international capital flows on the current account in a two-country world were studied by Walde (1996). Models with costly investment can be found in Brock (1988), Sen and Turnovsky (1989a;1989b), andMahbub Morshed andTurnovsky (2004), and the nature of investment is important for the dynamics. In the absence of any installation costs, capital stock adjustment occurs instantaneously.…”

"Meteor showers" and "heat waves" in Greek financial markets

“…Another view is related to the fact that such volatile movements reflect the outcome of optimal economic decisions by households and firms in response to changes in fiscal policies or world interest rates [Frenkel and Razin, 1986;Edwards, 1987]. Such related, mostly theoretical, work that attempts to identify the association between exchange rates and stock prices has been provided by Razin [1984], Murphy [1986], Dooley and Isard [1988], and Brock [1988].…”

Status Preference, Wealth and Dynamics in the Open Economy

“…3 One approach that has been extensively used, see, for instance, Brock (1988), Sen and Turnovsky (1989a, 1989b, 1990, and Frenkel, Razin, and Yuen (1996), is to incorporate into the small open economy model a convex installation cost function for investment demand. While the equality between the domestic rate of time preference and the world interest rate must still be imposed in this framework, the domestic capital stock (and output) will adjust sluggishly to maintain the equality between the rates of return of domestic and foreign assets.…”