Authors
Joao Ayres
Inter-American Development Bank
Constantino Hevia
Universidad Torcuato Di Tella
Juan Pablo Nicolini
Senior Research Economist and Universidad Torcuato Di Tella
Mussa Meets Backus-Smith: The Role of Primary Commodities
Abstract
We show that explicitly modeling primary commodities in an otherwise totally standard incomplete markets open economy model can go a long way in explaining the Mussa puzzle and the Backus-Smith puzzle, two of the main puzzles in the international economics literature.
[Online Appendix](https://doi.org/10.21034/wp.782 "Online Appendix")
This paper previously circulated with the title _Real Exchange Rates and Primary Commodity Prices: Mussa Meets Backus-Smith_.