01744cam a22002297 4500001000600000003000500006005001700011008004100028100002300069245011200092260006600204490005100270500001900321520080400340530006101144538007201205538003601277710004201313830008601355856003701441856003601478t0064NBER20150603195644.0150603s1988 mau||||fs|||| 000 0 eng d1 aObstfeld, Maurice.10aExchange-Rate Dynamics and Optimal Asset Accumulation Revisitedh[electronic resource] /cMaurice Obstfeld. aCambridge, Mass.bNational Bureau of Economic Researchc1988.1 aNBER technical working paper seriesvno. t0064 aFebruary 1988.3 aIt has recently been observed that when equations of motion for state variables are nonautonomous, optimal control problems involving Uzawa's endogenous rate of time preference cannot be solved using the change-of-variables method common in the literature. Instead, the problem must be solved by explicitly adding an additional state variable that measures the motion of time preference over time. This note reassesses earlier work of my own on exchange rate dynamics, which was based on a change-of- variables solution procedure. When the correct two-state-variable solution procedure is used, the model's qualitative predictions are unchanged. In addition, the analysis yields an intuitive interpretation of the extra co-state variable that arises in solving the individual's maximization problem. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aTechnical Working Paper Series (National Bureau of Economic Research)vno. t0064.4 uhttp://www.nber.org/papers/t006441uhttp://dx.doi.org/10.3386/t0064