@techreport{b9c50c8c8c854fe38bd70394fc13c1d3,
title = "Productivity, preferences and UIP deviations in an open economy business cycle model",
abstract = "We show that a flex-price two-sector open economy DSGE model can explain the poor degree of international risk sharing and exchange rate disconnect. We use a suite of model evaluation measures and examine the role of (1) traded and non-traded sectors; (2) financial market incompleteness; (3) preference shocks; (4) deviations from UIP condition for the exchange rates; and (5) creditor status in net foreign assets. We find that there is a good case for both traded and non-traded productivity shocks as well as UIP deviations in explaining the puzzles.",
keywords = "current account dynamics, real exchange rates, financial frictions, incomplete markets",
author = "Arnab Bhattacharjee and Chadha, {Jagjit S.} and Qi Sun",
note = "M1 - Working paper",
year = "2008",
language = "English",
series = "CDMA Working Paper Series",
publisher = "Centre for Dynamic Macroeconomic Analysis",
type = "WorkingPaper",
institution = "Centre for Dynamic Macroeconomic Analysis",
}