, ; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Trade and Exchange Rates in a Dynamic Competitive Economy"; ; "batchuser@example.com"; "Kehoe, Patrick J.", "Backus, David"; "Federal Reserve Bank of Minneapolis"; "Risk-sharing", "Exchange rates", "Government finance", "Cash-in-advance", "Monetary policy"; "F30 - International Finance: General", "E32 - Business Fluctuations; Cycles", "D46 - Value Theory"; "We derive the empirical implications of a popular class of international macroeconomic models. The real economy is a stochastic exchange model with complete markets. A standard result is that cross-country risk sharing implies perfect correlation between consumption paths across countries. With mild restrictions on the endowment process ii also implies a positive correlation between net exports and output in every country. We introduce money using cash-in-advance constraints and show that the implications for real variables carry over into the monetary economy. These dichotomy and neutrality propositions generalize those in the literature to stochastic environments with heterogeneous agents, and do not require the cash-in-advance constraint to bind in every state. They imply that any correlation between the nominal exchange rate and the balance of trade can be made consistent with the theory."^^; "1989-01"; "2018-03-13T20:11:34.137408665+00:00"^^; "https://doi.org/10.21034/wp.348"; ; "https://creativecommons.org/licenses/by-nc/4.0/"; "2020-04-28T18:07:48.745349486+00:00"^^; "19870500fedmwp348"; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "48", "393"; "Working paper (Federal Reserve Bank of Minneapolis. Research Department)"; "348"; "Exchange rates", "Risk-sharing", "Monetary policy", "Cash-in-advance", "Government finance"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; ; "Publication" . ; ; . ; ; .