In this paper we investigate the role of macroeconomic stabilization policies for the international transmission of productivity shocks and their eects on the external sector. We develop a two-country stochastic Dynamic New-Keynesian \perpetual youth" model of the business cycle with incomplete...

In a DSGE model with non-ricardian agents, a' la Blanchard-Yaari, stock-price fluctuations affect the dynamics of aggregate consumption through wealth effects. This wealth effects can be characterized as an additional dynamic distortion with respect to the social planner allocation, related to...