A Fiscal Theory of the Currency Risk Premium and of Sterilized Intervention

A Fiscal Theory of the Currency Risk Premium and of Sterilized Intervention
This paper develops a dynamic stochastic general equilibrium monetary portfolio choice model that accomplishes two objectives. First, it provides a theory of currency risk premia based on a weak and plausible form of fiscal nonneutrality. Domestic and foreign bonds become imperfect substitutes, the uncovered interest parity condition is replaced... READ MORE...

Publication date: February 2002
ISBN 9781451844818
$15.00

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