consider a two period open economy in which households consume food and oil and have preferences given by lnc1f lnc1o lnc2f lnc2o international macroeconomics chapter 4 january 11 2022 163 where ctf and cto denote the consumption of food and oil in period t 1 2 in each of the two periods households are endowed with one unit of oil and the terms of trade equal one there is free capital mobility and the world interest rate equals zero