Skip to content
RDP 8610: Equilibrium Exchange Rates and a Popular Model of International Asset Demands: An Inconsistency
Equation
π
0
≡
(
a
^
s
^
+
1
+
Σ
a
^
s
^
+
j
)
(
1
−
a
^
s
^
+
1
−
Σ
a
^
s
^
+
j
)
e
w
^
+
(
1
−
a
s
+
1
−
Σ
^
a
s
+
j
)
(
a
s
+
1
+
Σ
^
a
s
+
j
)
w
π
i
≡
−
(
1
−
a
^
s
^
+
1
−
Σ
a
^
s
^
+
j
)
a
^
s
^
+
i
e
w
^
−
(
a
s
+
1
+
Σ
^
a
s
+
j
)
a
i
w
i
=
2
,
…
,
s
π
^
i
≡
(
a
^
s
^
+
1
+
Σ
a
^
s
^
+
j
)
a
^
i
e
w
^
+
(
1
−
a
s
+
1
−
Σ
^
a
s
+
j
)
a
s
+
i
w
i
=
2
,
…
,
s
^
MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0xe9Lq=Jc9 vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKkFr0xfr=x fr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqbaeaabmGaaa qaaiabec8aWnaaBaaaleaacaaIWaaabeaakiabggMi6kaacIcaceGG HbGbaKaadaWgaaWcbaGabm4CayaajaGaey4kaSIaaGymaaqabaGccq GHRaWkcqqHJoWuceWGHbGbaKaadaWgaaWcbaGabm4CayaajaGaey4k aSIaamOAaaqabaGccaGGPaGaaiikaiaaigdacqGHsislceGGHbGbaK aadaWgaaWcbaGabm4CayaajaGaey4kaSIaaGymaaqabaGccqGHsisl cqqHJoWuceWGHbGbaKaadaWgaaWcbaGabm4CayaajaGaey4kaSIaam OAaaqabaGccaGGPaGaaiyzaiqacEhagaqcaiabgUcaRiaacIcacaaI XaGaeyOeI0IaaiyyamaaBaaaleaacaWGZbGaey4kaSIaaGymaaqaba GccqGHsislcuqHJoWugaqcaiaadggadaWgaaWcbaGaam4CaiabgUca RiaadQgaaeqaaOGaaiykaiaacIcacaGGHbWaaSbaaSqaaiaadohacq GHRaWkcaaIXaaabeaakiabgUcaRiqbfo6atzaajaGaamyyamaaBaaa leaacaWGZbGaey4kaSIaamOAaaqabaGccaGGPaGaai4Daaqaaaqaai abec8aWnaaBaaaleaacaWGPbaabeaakiabggMi6kabgkHiTiaacIca caaIXaGaeyOeI0IabiyyayaajaWaaSbaaSqaaiqadohagaqcaiabgU caRiaaigdaaeqaaOGaeyOeI0Iaeu4OdmLabmyyayaajaWaaSbaaSqa aiqadohagaqcaiabgUcaRiaadQgaaeqaaOGaaiykaiqacggagaqcam aaBaaaleaaceWGZbGbaKaacqGHRaWkcaWGPbaabeaakiaadwgaceWG 3bGbaKaacqGHsislcaGGOaGaaiyyamaaBaaaleaacaWGZbGaey4kaS IaaGymaaqabaGccqGHRaWkcuqHJoWugaqcaiaadggadaWgaaWcbaGa am4CaiabgUcaRiaadQgaaeqaaOGaaiykaiaacggadaWgaaWcbaGaam yAaaqabaGccaWG3baabaGaamyAaiabg2da9iaaikdacaGGSaGaeSOj GSKaaiilaiaadohaaeaacuaHapaCgaqcamaaBaaaleaacaWGPbaabe aakiabggMi6kaacIcaceGGHbGbaKaadaWgaaWcbaGabm4CayaajaGa ey4kaSIaaGymaaqabaGccqGHRaWkcqqHJoWuceWGHbGbaKaadaWgaa WcbaGabm4CayaajaGaey4kaSIaamOAaaqabaGccaGGPaGabiyyayaa jaWaaSbaaSqaaiaadMgaaeqaaOGaamyzaiqadEhagaqcaiabgUcaRi aacIcacaaIXaGaeyOeI0IaaiyyamaaBaaaleaacaWGZbGaey4kaSIa aGymaaqabaGccqGHsislcuqHJoWugaqcaiaadggadaWgaaWcbaGaam 4CaiabgUcaRiaadQgaaeqaaOGaaiykaiaacggadaWgaaWcbaGaam4C aiabgUcaRiaadMgaaeqaaOGaam4DaaqaaiaadMgacqGH9aqpcaaIYa GaaiilaiablAciljaacYcaceWGZbGbaKaaaaaaaa@CB6B@