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Intertemporal modeling of the current account

Turkish Economic Review, 2019-09, Vol.6 (3), p.185

2019. This work is licensed under http://creativecommons.org/licenses/by-nc/4.0 (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;EISSN: 2149-0414 ;DOI: 10.1453/ter.v6i3.1936

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  • Title:
    Intertemporal modeling of the current account
  • Author: Hassan, Belkacem GHASSAN ; DRISSI, Ramzi
  • Subjects: Economic models
  • Is Part Of: Turkish Economic Review, 2019-09, Vol.6 (3), p.185
  • Description: This paper explores the long-run current account to GDP ratio in the present value model framework (PVMCA). Firstly, we use Euler equation at macro level to identify a general equation of the per capita current account to GDP. Secondly, through the overlapping generations model we determine the equation of per-capita CA using relevant variables, and discuss the empirical validity of the PVMCA via the quasi-elasticity of CA-to-GDP with respect to the per capita growth rate of output and consumption. We show that the elasticities of CA-to-GDP to per-capita output and ant to per-capita consumption growths interact in opposite paths, meaning that a higher growth rate of consumption tomorrow involves more saving yesterday and brings up a positive current account balance.
  • Publisher: Istanbul: KSP Journals
  • Language: English
  • Identifier: EISSN: 2149-0414
    DOI: 10.1453/ter.v6i3.1936
  • Source: ProQuest Central
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