- 18 -
Where x is proportional to the degree of risk aversion, θ, bt, and b*t are the shares
of world wealth in domestic assets and foreign assets respectively and var(st+1) is the
conditional variance of the future exchange rate. Or as in a bond-market led speculative
attack model as:
i=i* +∆set+1 +θ(bt -bt* -st)
Another interesting modification specific to emerging markets is suggested by
Arida, Bacha and Lara-Resende (2004) wherein the risk premium depends on the
interaction between judicial uncertainty (the uncertainty that contracts will be enforced
by courts) and capital controls.
More intriguing information
1. Antidote Stocking at Hospitals in North Palestine2. Models of Cognition: Neurological possibility does not indicate neurological plausibility.
3. The name is absent
4. The name is absent
5. Global Excess Liquidity and House Prices - A VAR Analysis for OECD Countries
6. The name is absent
7. Corporate Taxation and Multinational Activity
8. Robust Econometrics
9. The name is absent
10. Shifting Identities and Blurring Boundaries: The Emergence of Third Space Professionals in UK Higher Education