Dynamics of Savings in a Small Open Economy

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Dynamics of Savings in a Small Open Economy

• Assaf Razin

Based On Foundations of International
Macroeconomics Maurice Obstfeld and Kenneth
Rogoff
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Utility Function
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Resource Constraint
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Consolidated Resource Constraint
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Introducing Capital
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Euler Conditions
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Consumption Function
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Infinite Horizon
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Example 1 Constant Output
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Ex. 2 Subjective Discount Rate Interest Rate
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Example 3 Iso-Elastic Utility Function
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Example 4 Permanent Income
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Current Account as a Shock Absorber
Wealth
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Example 5 Consumption Smoothing and Twisting
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Example 6 Variable Interest Rate
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Current Account with Variable Interest Rate
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Example 7 Stochastic Economy
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Euler Condition
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Current Account as a Predictor of Future Decline
in Output
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Empirical Test
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