The Risky Steady-State

11 Pages Posted: 1 Mar 2012

See all articles by Nicolas Coeurdacier

Nicolas Coeurdacier

London Business School

Hélène Rey

London Business School; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Pablo Winant

Bank of England

Date Written: January 2012

Abstract

We propose a simple quantitative method to linearize around the risky steady state of a small open economy. Unlike when the deterministic steady state is used, the net foreign asset position is well defined. We allow for both stochastic income and stochastic interest rate.

Keywords: steady state

JEL Classification: E10, F41

Suggested Citation

Coeurdacier, Nicolas and Rey, Helene and Winant, Pablo, The Risky Steady-State (January 2012). CEPR Discussion Paper No. DP8751. Available at SSRN: https://ssrn.com/abstract=2013763

Nicolas Coeurdacier

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Helene Rey

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pablo Winant

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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