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Timothy J. Kehoe

Dynamic Models of International Trade

Barcelona Graduate School of Economics

Spring 2009

 

Problem set

Data for Growth Accounting

Web page for T. J. Kehoe and E. C. Prescott, Great Depressions of the Twentieth Century

Notes on capital flows

Notes on great depressions

Notes on self-fulfilling crises

Notes on real exchange rates

Turkey-Germany real exchange rate data

Notes on sudden stops

Hints for problem set

Spain-United States real exchange rate data

 

1.  Closed Economy Models of Great Depressions

Questions:

1.         What is a great depression?

2.         How can we use growth accounting and dynamic general equilibrium theory to discipline our search for a satisfactory theory of great depressions?

Readings:

R. Bergoeing, P. J. Kehoe, T. J. Kehoe, and R. Soto, “A Decade Lost and Found: Mexico and Chile in the 1980s,” Review of Economic Dynamics, 5 (2002), 166-205.

J. C. Conesa, T. J. Kehoe, and K. J. Ruhl “Modeling Great Depressions:  The Depression in Finland in the 1990s,” Federal Reserve Bank of Minneapolis Quarterly Review, 31:1 (2007), 16–44. 

T. J. Kehoe y E. C. Prescott, “Great Depressions of the Twentieth Century,” Review of Economic Dynamics, 5 (2002), 1-18.

 

2.  Self-Fulfilling Crises

Questions:

3.         Can we construct a dynamic stochastic general equilibrium model in which financial crises are driven by self-fulfilling expectations on the part of investors?

4.         What role did the maturity of Mexican government debt play in the 1994–95 financial crisis?

Readings:

H. L. Cole and T. J. Kehoe (1996), “A Self-Fulfilling Model of Mexico's 1994-95 Debt Crisis,” Journal of International Economics, 41, 309-330.

H. L. Cole and T. J. Kehoe (2000), “Self-Fulfilling Debt Crises,” Review of Economic Studies, 67, 91-116. 

 

3.  Real Exchange Rates and Crises

Questions:

5.         Is the distinction between traded and nontraded goods essential for accounting for real exchange rate fluctuations?

6.         How far can a standard model with traded and nontraded goods go in accounting for the changes in relative prices and quantities observed in developing countries after a sudden stop in capital flows as, for example, in the Mexican Crisis of 1994-95?

Readings:

C. M. Betts and T. J. Kehoe, Real Exchange Rate Movements and the Relative Price of Nontraded Goods,Federal Reserve Bank of Minneapolis Staff Report 415.  

C. M. Betts and T. J. Kehoe, “U.S. Real Exchange Rate Fluctuations and Relative Price Fluctuations,” Journal of Monetary Economics, 53 (2006), 1297-1326.

G. Fernandez de Cordoba and T. J. Kehoe, Capital Flows and Real Exchange Rate Fluctuations Following Spain's Entry into the European Community, Journal of International Economics, 51 (2000), 49-78.

T. J. Kehoe and K. J. Ruhl, Sudden Stops, Sectoral Reallocations, and the Real Exchange Rate,” Journal of Development Economics, forthcoming.


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URL: http://www.econ.umn.edu/~tkehoe/classes/bgse-09.html/ 

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Last modified: 3 June 2009 6:43