Merchanting and Current Account Balances

28 Pages Posted: 15 Jan 2017

See all articles by Elisabeth Beusch

Elisabeth Beusch

Swiss National Bank

Barbara Döbeli

Swiss National Bank

Andreas M. Fischer

Swiss National Bank; Centre for Economic Policy Research (CEPR)

Pinar Yesin

Swiss National Bank

Date Written: January 2017

Abstract

Merchanting is goods trade that does not cross the border of the firm's country of residence. Merchanting grew strongly in the last decade in several European economies and has become an important determinant of these countries’ current account. Because merchanting firms reinvest their earnings abroad to expand their international activities, this practice raises national savings in the home country without increasing domestic investment. This paper examines the empirical linkages between merchanting and the current account balance. Using a sample of 53 countries during 1980–2011, it shows that merchanting activity is a determinant of the medium‐term current account balance.

Suggested Citation

Beusch, Elisabeth and Döbeli, Barbara and Fischer, Andreas M. and Yeşin, Pınar, Merchanting and Current Account Balances (January 2017). The World Economy, Vol. 40, Issue 1, pp. 140-167, 2017, Available at SSRN: https://ssrn.com/abstract=2899177 or http://dx.doi.org/10.1111/twec.12355

Elisabeth Beusch (Contact Author)

Swiss National Bank ( email )

Barbara Döbeli

Swiss National Bank ( email )

Andreas M. Fischer

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland
+41 1 631 3294 (Phone)
+41 1 631 3901 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Pınar Yeşin

Swiss National Bank ( email )

Boersenstrasse 15, P.O.Box
Zurich, CH-8022
Switzerland
41-58-631-3969 (Phone)

HOME PAGE: http://www.pinaryesin.com

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