Abstract
We develop a multi-country quantitative model of the global distribution of current account and external balances. Countries accumulate domestic capital and foreign assets to smooth consumption over time against exogenous productivity shocks in the presence of liquidity constraints. In equilibrium, optimal consumption and investment responses to persistent productivity shocks imply a degree of intertemporal substitution across countries that can explain up to one-third of the current account dispersion in the data.
| Original language | English |
|---|---|
| Pages (from-to) | 477-496 |
| Number of pages | 20 |
| Journal | Review of Economic Dynamics |
| Volume | 16 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2013 Jul 1 |
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All Science Journal Classification (ASJC) codes
- Economics and Econometrics
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Accounting for global dispersion of current accounts. / Chang, Yong Sung; Kim, Sun Bin; Lee, Jaewoo.
In: Review of Economic Dynamics, Vol. 16, No. 3, 01.07.2013, p. 477-496.Research output: Contribution to journal › Article
TY - JOUR
T1 - Accounting for global dispersion of current accounts
AU - Chang, Yong Sung
AU - Kim, Sun Bin
AU - Lee, Jaewoo
PY - 2013/7/1
Y1 - 2013/7/1
N2 - We develop a multi-country quantitative model of the global distribution of current account and external balances. Countries accumulate domestic capital and foreign assets to smooth consumption over time against exogenous productivity shocks in the presence of liquidity constraints. In equilibrium, optimal consumption and investment responses to persistent productivity shocks imply a degree of intertemporal substitution across countries that can explain up to one-third of the current account dispersion in the data.
AB - We develop a multi-country quantitative model of the global distribution of current account and external balances. Countries accumulate domestic capital and foreign assets to smooth consumption over time against exogenous productivity shocks in the presence of liquidity constraints. In equilibrium, optimal consumption and investment responses to persistent productivity shocks imply a degree of intertemporal substitution across countries that can explain up to one-third of the current account dispersion in the data.
UR - http://www.scopus.com/inward/record.url?scp=84878382177&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84878382177&partnerID=8YFLogxK
U2 - 10.1016/j.red.2012.09.007
DO - 10.1016/j.red.2012.09.007
M3 - Article
VL - 16
SP - 477
EP - 496
JO - Review of Economic Dynamics
JF - Review of Economic Dynamics
SN - 1094-2025
IS - 3
ER -