Pareto Weights as Wedges in Two-Country Models
Working Paper 21773
DOI 10.3386/w21773
Issue Date
In models with recursive preferences, endogenous variation in Pareto weights would be interpreted as wedges from the perspective of a frictionless model with additive preferences. We describe the behavior of the (relative) Pareto weight in a two-country world and explore its interaction with consumption and the real exchange rate.
Published Versions
David Backus & Chase Coleman & Axelle Ferriere & Spencer Lyon, 2016. "Pareto weights as wedges in two-country models," Journal of Economic Dynamics and Control, . citation courtesy of