TY  - JOUR
AU  - Engel,Charles
TI  - Comments on Obstfeld and Rogoff's "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?"
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7818
PY  - 2000
Y2  - July 2000
UR  - http://www.nber.org/papers/w7818
L1  - http://www.nber.org/papers/w7818.pdf
N1  - Author contact info:
Charles Engel
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI  53706-1393
Tel: 608/262-3697
Fax: 608/262-2033
E-Mail: cengel@ssc.wisc.edu
AB  - The paper offers comments on Obstfeld and Rogoff (2000).  The comments primarily focus on three issues: (a)  How do we reconcile the numerical examples of OR, which show quantitatively plausible resolutions to the major puzzles arising from costs of trade, with previous studies that have found trade costs do not get us very far?  (b)  Does the solution proposed by OR solve the puzzles at the expense of introducing new puzzles?  That is, does their solution have counterfactual implications for other economic relationships?  (The prime example of what I have in mind here is what OR call the  Backus-Smith puzzle'.)  (c)  Some of the problems connected with points (a) and (b) can be rectified by moving away from the assumption of complete asset markets.  But, then, how do we assess how much of the solution to the puzzle is coming from trade costs versus capital-market imperfections?
ER  -