{"title":"Testing for Consumer Risk-Pooling in the Open Economy – further Results","authors":"Patrick Minford, Zhirong Ou, Zheyi Zhu","doi":"10.1007/s11079-024-09782-5","DOIUrl":null,"url":null,"abstract":"<p>In this supplement to Minford et al. Int J Financ Econ 26(2):19932021 (2021), we revisit the ‘puzzle’ in open economy studies that evidence of international risk-sharing is hardly seen despite active cross-country financial markets. We reassess both risk-pooling via state-contingent bonds, and uncovered interest parity – both were believed to be different, and spuriously rejected, in previous work – in the context of a full DSGE model of the New Keynesian type. We prove that the two models are identical, both analytically and numerically. When tested as part of such a full DSGE model by indirect inference which circumvents the bias of single-equation tests, we find universal evidence of international risk-sharing.</p>","PeriodicalId":46980,"journal":{"name":"Open Economies Review","volume":null,"pages":null},"PeriodicalIF":1.5000,"publicationDate":"2024-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Open Economies Review","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s11079-024-09782-5","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
In this supplement to Minford et al. Int J Financ Econ 26(2):19932021 (2021), we revisit the ‘puzzle’ in open economy studies that evidence of international risk-sharing is hardly seen despite active cross-country financial markets. We reassess both risk-pooling via state-contingent bonds, and uncovered interest parity – both were believed to be different, and spuriously rejected, in previous work – in the context of a full DSGE model of the New Keynesian type. We prove that the two models are identical, both analytically and numerically. When tested as part of such a full DSGE model by indirect inference which circumvents the bias of single-equation tests, we find universal evidence of international risk-sharing.
期刊介绍：
The topics covered in Open Economies Review include, but are not limited to, models and applications of (1) trade flows, (2) commercial policy, (3) adjustment mechanism to external imbalances, (4) exchange rate movements, (5) alternative monetary regimes, (6) real and financial integration, (7) monetary union, (8) economic development and (9) external debt. Open Economies Review welcomes original manuscripts, both theoretical and empirical, dealing with international economic issues or national economic issues that have transnational relevance. Furthermore, Open Economies Review solicits contributions bearing on specific events on important branches of the literature. Open Economies Review is open to any and all contributions, without preferences for any particular viewpoint or school of thought. Open Economies Review encourages interdisciplinary communication and interaction among researchers in the vast area of international and transnational economics. Authors will be expected to meet the scientific standards prevailing in their respective fields, and empirical findings must be reproducible. Regardless of degree of complexity and specificity, authors are expected to write an introduction, setting forth the nature of their research and the significance of their findings, in a manner accessible to researchers in other disciplines. Officially cited as: Open Econ Rev
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