Interpreting the Institutuion Industry Demand Repo


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    What you say is correct. As far as being low, we have little data to determine what actual flows are. In the gravity model we give it a fairly high impedence (friction) because we wanted to encourage local use for banking, home mortgages and business loans. When households (or anyone) buy insurance, I-O treats that as a purchase from the insurance carrier sector. Agents are paid as part of the insurance carrier production function. There are no foreign exports because there are none in the BEA benchmark. There would be mostly intermediate demand for this sector.
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