The Dynamic-Optimizing Approach to the Current Account: Theory and Evidence

48 Pages Posted: 21 Nov 2007 Last revised: 6 Nov 2022

See all articles by Assaf Razin

Assaf Razin

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Date Written: April 1993

Abstract

The organization of this paper is as follows. Section I builds an empirically implementable model of the current account. Likewise, Section II derives the essential time series properties of the real exchange rate. Positive implications of the intertemporal approach against panel and international cross section data are analyzed in Section III. Section IV brings out evidence relevant for the normative implications of the intertemporal approach, highlighting the role of taxes and incentives, capital controls, and convergence of growth rates. Section V concludes.

Suggested Citation

Razin, Assaf, The Dynamic-Optimizing Approach to the Current Account: Theory and Evidence (April 1993). NBER Working Paper No. w4334, Available at SSRN: https://ssrn.com/abstract=478736

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