Current accounts in the long run and the intertemporal approach: a panel data investigation

Cerrato, M. , Kalyoncu, H., Hassan Naqvi, N. and Tsoukis, C. (2015) Current accounts in the long run and the intertemporal approach: a panel data investigation. World Economy, 38(2), pp. 340-359. (doi: 10.1111/twec.12152)

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Abstract

This paper is a theory-based study of the long-run determinants of the current account (CA). For many OECD economies after WWII, 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.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Cerrato, Professor Mario
Authors: Cerrato, M., Kalyoncu, H., Hassan Naqvi, N., and Tsoukis, C.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:World Economy
Publisher:Wiley
ISSN:0378-5920
ISSN (Online):1467-9701

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