A new perspective on the new ruleof the current account

• 成果类型: Article; Proceedings Paper
• 署名作者: Tille, Cedric; van Wincoop, Eric
• 署名单位: University of Virginia; National Bureau of Economic Research
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2009.07.001
• 发表日期: 2010
• 页码: 89-99
• 关键词: International Capital Flows; The current account; The new rule

摘要

In an influential series of contributions, Kraay and Ventura (2000, 2003) offer a new rule for the current account: in response to a temporary income shock, the change in the current account is equal to the change in saving times the ratio of net foreign assets to wealth. We analyze the impact of a temporary income shock on the current account in the context of a two-country dynamic general equilibrium model of portfolio choice and show that the new rule does not hold. We also show that the cross-section evidence reported by Kraay and Ventura in favor of the new rule is a feature implied by the steady state of the model that is conceptually distinct from the new rule. We argue that the new rule could only hold in a model with one-way capital flows (only inflows or outflows, but not both), a feature that is strongly counterfactual. (C) 2009 Elsevier B.V. All rights reserved.