Current Accounts in the Long Run and the Intertemporal Approach: A Panel Data Investigation

20 Pages Posted: 10 Feb 2015

See all articles by Mario Cerrato

Mario Cerrato

London Metropolitan University - Department of Economics, Finance and International Business (EFIB)

Huseyin Kalyoncu

Meliksah University

Naveed Hassan Naqvi

World Bank

Christopher Tsoukis

London Metropolitan University - Department of Economics, Finance and International Business (EFIB)

Date Written: February 2015

Abstract

This paper is a theory‐based study of the long‐run determinants of the current account (CA). For many OECD economies after the Second World War, there has been more long‐run variation in the CA data than is emphasised by a ‘Permanent Income’ version of the intertemporal approach that is based on consumption‐smoothing and that allows only transitory CA imbalances. A theoretical model of the CA is developed, based on the ‘broader’ variant of the intertemporal approach that stresses the long‐term component of the CA. We find that some key theoretical predictions hold, while others fail, validating the approach but also pointing to its limitations.

Suggested Citation

Cerrato, Mario and Kalyoncu, Huseyin and Naqvi, Naveed Hassan and Tsoukis, Chris, Current Accounts in the Long Run and the Intertemporal Approach: A Panel Data Investigation (February 2015). The World Economy, Vol. 38, Issue 2, pp. 340-359, 2015. Available at SSRN: https://ssrn.com/abstract=2562680 or http://dx.doi.org/10.1111/twec.12152

Mario Cerrato

London Metropolitan University - Department of Economics, Finance and International Business (EFIB) ( email )

Economics Subject Group, LMBS
London EC2M 6SQ, EC2M 6SQ
United Kingdom

Huseyin Kalyoncu

Meliksah University ( email )

Kayserey, 38280
Turkey

Naveed Hassan Naqvi

World Bank

1818 H Street, NW
Washington, DC 20433
United States

Chris Tsoukis

London Metropolitan University - Department of Economics, Finance and International Business (EFIB) ( email )

Economics Subject Group, LMBS
London EC2M 6SQ, EC2M 6SQ
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
146
PlumX Metrics