Composition and growth effects of the current account: A synthesized portfolio view

• 成果类型: Article
• 署名作者: Guo, Kai; Jin, Keyu
• 署名单位: Harvard University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2009.03.003
• 发表日期: 2009
• 页码: 31-41
• 关键词: current account; Portfolio view; Valuation effects; Composition effects; Growth effects

摘要

This paper analyzes a useful accounting framework that breaks down the current account to two components: a composition effect and a growth effect. We show that past empirical evidence, which strongly supports the growth effect as the main driver of current account dynamics, is misconceived. The remarkable empirical success of the growth effect is driven by the dominance of the cross-sectional variation, which, under conditions met by the data, is generated by an accounting approximation. In contrast to previous findings that the portfolio share of net foreign assets to total assets is constant in a country, both our theoretical and empirical results support a highly persistent process or a unit-root process, with some countries displaying a trend. Finally, we reestablish the composition effect as the quantitatively dominant driving force of current account dynamics in the past data. (C) 2009 Elsevier B.V. All rights reserved.