Discussion paper

DP8751 The Risky Steady-State

Hélène Rey Nicolas Coeurdacier Pablo Winant

1 Jan 2012

We propose a simple quantitative method to linearize around the risky steady state of a small open economy. Unlike when the deterministic steady state is used, the net foreign asset position is well defined. We allow for both stochastic income and stochastic interest rate.

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Citation

Rey, H, N Coeurdacier and P Winant (2012), ‘DP8751 The Risky Steady-State‘, CEPR Discussion Paper No. 8751. CEPR Press, Paris & London. https://cepr.org/publications/dp8751