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dc.contributor.authorWillen, Paulen_US
dc.date.accessioned2012-02-23T08:23:54Z-
dc.date.available2012-02-23T08:23:54Z-
dc.date.issued2004en_US
dc.identifier.urihttp://hdl.handle.net/10419/55612-
dc.description.abstractIn this paper, we show that incomplete markets lead to trade imbalances. We use a two-period general equilibrium model with countries composed of heterogeneous households. We look at a world where, when markets are complete, countries engage in balanced trade; and we show that when some of those markets are absent, trade imbalances emerge. Market incompleteness across countries causes trade imbalances because national income in some countries is more sensitive to risky asset payoffs than in others. Market incompleteness within countries causes trade imbalances because superior risk-sharing in one country leads to a lower precautionary demand for saving.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of Boston Boston, MAen_US
dc.relation.ispartofseriesWorking paper series // Federal Reserve Bank of Boston 04-8en_US
dc.subject.jelD52en_US
dc.subject.jelF30en_US
dc.subject.ddc330en_US
dc.titleIncomplete markets and tradeen_US
dc.typeWorking Paperen_US
dc.identifier.ppn500707774en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Working Paper Series, Federal Reserve Bank of Boston

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