The Relative Dynamics of the Current Account and Investment in the G7-Economies
Economic Journal, 2001, 111, 471, C148-163
HOFFMANN, Mathias, The Relative Dynamics of the Current Account and Investment in the G7-Economies, Economic Journal, 2001, 111, 471, C148-163 - https://hdl.handle.net/1814/23756
Retrieved from Cadmus, EUI Research Repository
This paper contributes to the empirics of the intertemporal approach to the current account. We use a cointegrated VAR framework to identify permanent and transitory components of country-specific and global shocks. Our approach allows us to investigate empirically the sensitivity to persistence implied by many forward-looking models and our results shed new light on the excess volatility of investment encountered by Glick and Rogoff (1995). In G7 data, we find the relative current-account and investment response to be in line with the intertemporal approach.
Cadmus permanent link: https://hdl.handle.net/1814/23756
ISSN: 0013-0133; 1468-0297
Earlier different version: http://hdl.handle.net/1814/4955
Version: The article is a revised version of a chapter of the author's EUI PhD thesis, 1999.
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