Abstract
Consumer's durable physical assets, the ownership of which is assumed not to be internationally traded, are introduced into a model of a small open economy under capital mobility. The determination of the long-run equilibrium stock of external assets is dependent upon the preference between consumption of non-durables and of the services of durables, as well as on the savings rate. A tax on the holding of consumer's durable assets decreases the equilibrium stock of such assets and increases that of the external asset. A subsidy on capital does not necessarily increase the equilibrium stock of the latter asset.
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