The Volatility of Consumption in a Simple General Equilibrium Model /

This paper studies the volatility of consumption relative to output in the context of a simple general equilibrium model of a small open economy subject to exogenous shocks in productivity. With infinite horizons and exogenous relative prices, the model generates variance estimates that are well abo...

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Detalles Bibliográficos
Autor principal: Tersman, Gunnar
Formato: Revista
Lenguaje:English
Publicado: Washington, D.C. : International Monetary Fund, 1992.
Colección:IMF Working Papers; Working Paper ; No. 1992/109
Acceso en línea:Full text available on IMF
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245 1 4 |a The Volatility of Consumption in a Simple General Equilibrium Model /  |c Gunnar Tersman. 
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300 |a 1 online resource (34 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a This paper studies the volatility of consumption relative to output in the context of a simple general equilibrium model of a small open economy subject to exogenous shocks in productivity. With infinite horizons and exogenous relative prices, the model generates variance estimates that are well above what can be observed in empirical data. While finite horizons and endogenous terms of trade reduce the volatility of consumption, the model fails to generate sufficient serial correlation with respect to the consumption growth rate. If the household's decision problem is modified to take into account durability and adjustment costs, the model does well on both dimensions. 
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830 0 |a IMF Working Papers; Working Paper ;  |v No. 1992/109 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/1992/109/001.1992.issue-109-en.xml  |z IMF e-Library