International Macroeconomic Fluctuations and the Current Account
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0008-4085; 1540-5982
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The Canadian Journal of Economics, 2003, 36, 2, 401-420
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HOFFMANN, Mathias, International Macroeconomic Fluctuations and the Current Account, The Canadian Journal of Economics, 2003, 36, 2, 401-420 - https://hdl.handle.net/1814/23755
Abstract
Intertemporal models of the current account generally assume that global shocks do not affect the current account. We use this assumption to identify global and country-specific shocks in a bivariate VAR of output and the current account. Cross-country evidence from the G7 economies suggests that this identification works surprisingly well. We then employ our method to collect stylized facts on international macroeconomic fluctuations. We find that long-term output growth is driven mainly by global factors in most G7 countries and that country-specific shocks are less persistent and generally less volatile than global shocks.
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The article is a revised version of a chapter of the author's EUI PhD thesis, 1999.