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http://ssrn.com/abstract=1531509
 
 

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Accounting for Global Dispersion of Current Accounts


Yongsung Chang


University of Rochester - Department of Economics; Yonsei University - Department of Economics

Sun-Bin Kim


Concordia University, Quebec - Department of Economics

Jaewoo Lee


International Monetary Fund (IMF) - Research Department

December 2009

IMF Working Paper No. 09/276

Abstract:     
We undertake a quantitative analysis of the dispersion of current accounts in an open economy version of incomplete insurance model, incorporating important market frictions in trade and financial flows. Calibrated with conventional parameter values, the stochastic stationary equilibrium of the model with limited borrowing can account for about two-thirds of the global dispersion of current accounts. The easing of financial frictions can explain nearly all changes in the current account dispersion in the past four decades whereas the easing of trade frictions has almost no impact on the current account dispersion.

Number of Pages in PDF File: 34

Keywords: Capital transactions, Consumer goods, Cross country analysis, Current account, Economic integration, Economic models, External shocks, International capital markets, International financial system, International trade

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Date posted: January 5, 2010  

Suggested Citation

Chang, Yongsung and Kim, Sun-Bin and Lee, Jaewoo, Accounting for Global Dispersion of Current Accounts (December 2009). IMF Working Papers, Vol. , pp. 1-33, 2009. Available at SSRN: http://ssrn.com/abstract=1531509

Contact Information

Yongsung Chang (Contact Author)
University of Rochester - Department of Economics ( email )
Harkness Hall
Rochester, NY 14627
United States
Yonsei University - Department of Economics ( email )
50 Yonsei-Ro
Seoul, 120-749
Korea
Sun-Bin Kim
Concordia University, Quebec - Department of Economics ( email )
1455 de Maisonneuve Blvd., W.
Montreal, Quebec H3G 1MB
Canada
514-848-3923 (Phone)
Jaewoo Lee
International Monetary Fund (IMF) - Research Department ( email )
700 19th Street NW
Washington, DC 20431
United States
202-623-7331 (Phone)
202-623-6334 (Fax)
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