Small open economies

Baxter, M. and M. J. Crucini. 1995. "Business Cycles and the Asset Structure of Foreign-Trade." International Economic Review

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A second strand of literature studies business cycles in small open economies. These studies typically restrict access to international risk sharing in ways that seem, empirically, to be more reasonable than the assumption of complete markets. But these analyses are necessarily silent on the factors affecting world interest rates and asset prices.
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