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The natural rate of interest in a small open economy

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  • Fernando de Holanda Barbosa

    (FGV)

Abstract

The goal of this paper is to show that the natural rate of interest in a small open economy, with access to the world capital markets, is equal to the international real rate of interest. We show this property by using the infinitely-lived overlapping generations model and we use this model to analyze both fixed and flexible exchange rate regimes.

Suggested Citation

  • Fernando de Holanda Barbosa, 2011. "The natural rate of interest in a small open economy," Working Papers 0121, Universidade Federal do Paraná, Department of Economics.
    • Handle: RePEc:fup:wpaper:0121
    Note: Creation Date corresponds to the year in which the paper was published on the Department of Economics website. The paper may have been written a small number of months before its publication date.
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    References listed on IDEAS

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    More about this item

    Keywords

    small open economy; natural rate of interest; complete and incomplete asset markets;
    All these keywords.

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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    This paper has been announced in the following NEP Reports:

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