Consumption Smoothing and the Current Account: Evidence for France, 1970-94

18 Pages Posted: 15 Feb 2006

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Claude Bismut

affiliation not provided to SSRN

Paul Anthony Cashin

International Monetary Fund (IMF)

C. John McDermott

Reserve Bank of New Zealand

Date Written: November 1995

Abstract

This paper estimates a simple consumption-smoothing model of the French current account, and examines its capacity to predict recent developments in France`s external performance. The model views the current account as a buffer through which private agents can smooth consumption over time in response to temporary disturbances to output, investment, and government expenditure. The empirical results indicate that the model performs well overall, and predicts correctly the sharp turnaround in France`s external accounts observed in the past three years--a feature of the data that conventional models of trade flows, based on income and relative price variables, appear unable to explain.

JEL Classification: F32, F41, F47

Suggested Citation

Agenor, Pierre-Richard and Bismut, Claude and Cashin, Paul Anthony and McDermott, C. John, Consumption Smoothing and the Current Account: Evidence for France, 1970-94 (November 1995). IMF Working Paper, Vol. , pp. 1-18, 1995. Available at SSRN: https://ssrn.com/abstract=883265

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Claude Bismut

affiliation not provided to SSRN

No Address Available

Paul Anthony Cashin

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

C. John McDermott

Reserve Bank of New Zealand ( email )

2 The Terrace
P.O. Box 2498
Wellington, 6011
New Zealand

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