Trade reforms and current account imbalances

• 成果类型: Article
• 署名作者: Ju, Jiandong; Shi, Kang; Wei, Shang-Jin
• 署名单位: Tsinghua University; Chinese University of Hong Kong; Columbia University; National Bureau of Economic Research; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2021.103451
• 发表日期: 2021
• 关键词: current account; trade liberalization

摘要

This paper studies the effects of trade liberalization on capital flows in a dynamic Heckscher-Ohlin model and makes four contributions. First, we identify an interest rate overdetermination problem in such a model, and solve it with an endogenous discount factor. Second, we show that a trade liberalization in a developing country generally leads to a greater current account surplus, which is the exact opposite of a common but partial equilibrium intuition. Third, factor market reforms reinforce the effect of the trade liberalization on capital outflows. Finally, our calibrations suggest that China's accession to the WTO is likely an important factor driving the rise of current account surplus during 2001-2010. (C) 2021 Elsevier B.V. All rights reserved.