International macroe.. - Free

SUBJECT INDEX 365Overlapping observations, advantagesof, 165Overshooting exchange ratePricing to market, 298Redux model, 279Delayed, 250Dornbusch model, 240Structural VAR, 254Stochastic Mundell-Flemingmodel, 248Overshooting terms of trade, Reduxmodel, 280PPareto optimum—see Social optimumPass through, 266, 285Perfect foresight, 147, 238Permanent—transitory componentsrepresentation of unit-rootprocess, 46—48, 102Peso problem, 186—193, 205, 332Phase diagram, 260Political risk, 5Posterior probabilities, 192Power of a statistical test, 50Present-value formula, 86, 310Pricing nominal contracts, pitfalls,176Pricing to market, 285—301Prior probability, 192Process switching, 311Purchasing-power parity, 80—83,207-208Monetary model, 85Absolute, 209Cassel’s view (begin), 80—81Commodity arbitrage view,82Pricing-to-market model, 292Redux model, 268Relative, 209QQuadratic formula, 147Quadratic optimization problem,145Quantity equation, 117, 121RRational bubble, 87Reaction function, 335Real business cycle model, 137—158One-sector closed economy,139—149Two-country model, 149—159Reduced form, 31Regime shift, 189Representative agent, 106Revaluation, 234, 336Risk aversion, 10, 202Constant absolute, 10Insurance demand, 175Required in Lucas model tomatch data, 182Risk premium compensation,175Risk neutralForward exchange, Lucas model,175