COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Post Office Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 771

"International Lending and Borrowing in a Stochastic Sequence Equilibrium"

Richard H. Clarida

May 1985

The objective of this paper is to study international lending and borrowing in general equilibrium framework in which countries are subject to stochastic productivity fluctuations. The role of time preference, borrowing limits, and lump sum taxation are rigorously analyzed, yielding results which enrich those obtained in the existing literature.

JEL Classification: 441, 431

Keywords: International lending and borrowing, stochastic productivity fluctuations