Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization
We investigate the effects of terms-of-trade shocks on the spending and current account where households with the modified Becker-Mulligan endogenous time preference maximize their utility over an infinite planning period. Our results show that, with the modified Becker-Mulligan preference, the effe...
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| Format: | Article |
| Language: | English |
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Wiley
2016-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2016/4190294 |
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| _version_ | 1832567666655625216 |
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| author | Deng-Shan Wang Miao Jin Zeng-Gang Guo |
| author_facet | Deng-Shan Wang Miao Jin Zeng-Gang Guo |
| author_sort | Deng-Shan Wang |
| collection | DOAJ |
| description | We investigate the effects of terms-of-trade shocks on the spending and current account where households with the modified Becker-Mulligan endogenous time preference maximize their utility over an infinite planning period. Our results show that, with the modified Becker-Mulligan preference, the effect of the deterioration in terms of trade on the current account depends on people’s characters. However, with the second preference we have considered, the deterioration in terms of trade will result in a current account deficit, which is the same as Obstfeld (1982), where households with Uzawa endogenous time preference are considered; deterioration in terms of trade leads to a decline in the current account. These theoretical results are consistent with the empirical evidence by numerical simulations. |
| format | Article |
| id | doaj-art-9cb4aab512764e2ca98d91636c7e40ad |
| institution | Kabale University |
| issn | 1026-0226 1607-887X |
| language | English |
| publishDate | 2016-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-9cb4aab512764e2ca98d91636c7e40ad2025-02-03T01:00:58ZengWileyDiscrete Dynamics in Nature and Society1026-02261607-887X2016-01-01201610.1155/2016/41902944190294Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic OptimizationDeng-Shan Wang0Miao Jin1Zeng-Gang Guo2School of Science, Beijing Information Science and Technology University, Beijing 100192, ChinaGuanghua School of Management, Peking University, Beijing 100871, ChinaCEMA, Central University of Finance and Economics, Beijing 100081, ChinaWe investigate the effects of terms-of-trade shocks on the spending and current account where households with the modified Becker-Mulligan endogenous time preference maximize their utility over an infinite planning period. Our results show that, with the modified Becker-Mulligan preference, the effect of the deterioration in terms of trade on the current account depends on people’s characters. However, with the second preference we have considered, the deterioration in terms of trade will result in a current account deficit, which is the same as Obstfeld (1982), where households with Uzawa endogenous time preference are considered; deterioration in terms of trade leads to a decline in the current account. These theoretical results are consistent with the empirical evidence by numerical simulations.http://dx.doi.org/10.1155/2016/4190294 |
| spellingShingle | Deng-Shan Wang Miao Jin Zeng-Gang Guo Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization Discrete Dynamics in Nature and Society |
| title | Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization |
| title_full | Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization |
| title_fullStr | Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization |
| title_full_unstemmed | Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization |
| title_short | Harberger-Laursen-Metzler Effect with Modified Becker-Mulligan Preference by Dynamic Optimization |
| title_sort | harberger laursen metzler effect with modified becker mulligan preference by dynamic optimization |
| url | http://dx.doi.org/10.1155/2016/4190294 |
| work_keys_str_mv | AT dengshanwang harbergerlaursenmetzlereffectwithmodifiedbeckermulliganpreferencebydynamicoptimization AT miaojin harbergerlaursenmetzlereffectwithmodifiedbeckermulliganpreferencebydynamicoptimization AT zenggangguo harbergerlaursenmetzlereffectwithmodifiedbeckermulliganpreferencebydynamicoptimization |