Winant, Pablo; Rey, Helene; Coeurdacier, Nicolas
American Economic Review,
2011, Letnik:
101, Številka:
3
Journal Article
We propose a simple quantitative method to linearize around the risky steady state of a small open economy. Unlike when the deterministic steady state is used, the net foreign asset position is well defined. We allow for stochastic income and stochastic interest rate.
