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dc.contributor.authorCORSETTI, Giancarlo
dc.contributor.authorKONSTANTINOU, Panagiotis T.
dc.date.accessioned2006-05-19T14:01:50Z
dc.date.available2006-05-19T14:01:50Z
dc.date.issued2005
dc.identifier.urihttp://hdl.handle.net/1814/4436
dc.description.abstractThis paper provides empirical evidence on the adjustment dynamics of the US net foreign liabilities, net output and consumption. We use empirical techniques that allow us to quantify the relative importance of permanent and transitory innovations. We find that transitory shocks contribute considerably to the variation in all three variables for a horizon up to a year, and their contribution remains significant for a horizon up to five years. A permanent shock – that we interpret as a technological shock – dominates the variation of all variables at longer horizons. In response to this shock, net foreign liabilities, net output and consumption all increase – consistent with the effect of productivity gains raising domestic return to capital and thus generating an inflow of foreign capital. Conversely, shocks that cause net output and consumption to increase temporarily are accompanied by short-run accumulation of net foreign assets – in contrast with traditional model predicting procyclical current account deficits in response to temporary output fluctuations. Instead, our results are qualitatively consistent with predictions of the intertemporal approach to the current account.en
dc.language.isoenen
dc.relation.ispartofseriesCEPR Discussion Paperen
dc.relation.ispartofseries2005/4920en
dc.titleCurrent Account Theory and the Dynamics of US Net Foreign Liabilitiesen
dc.typeWorking Paperen
dc.neeo.contributorCORSETTI|Giancarlo|aut|EUI70002
dc.neeo.contributorKONSTANTINOU|Panagiotis|aut|
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