Register  |  Login  |  Inquiries  |  Sitemap
Advanced Search
Journal of Economic Integration 2006 September;21(3) :593-618.
DOI: https://doi.org/10.11130/jei.2006.21.3.593
Current Account Dynamics in OECD Countries and in the New EU Member States: An Intertemporal Approach
Matthieu Bussière
Marcel Fratzscher and 
Gernot J. Müller 
European Central Bank
Copyright ©2006 Journal of Economic Integration
ABSTRACT

This paper investigates the large current account deficits observed in most new EU member states using an intertemporal model. The standard model is extended to include: (1) the persistence of current account positions and (2) the relevance of the fiscal balance. Specifically, a closed form solution for consumption in the presence of habit persistence and liquidity constraints is derived, yielding a dynamic model for the current account where fiscal deficits have an effect. The model is estimated for a panel of 33 countries. A key finding is that current accounts in most new EU member states are broadly in line with their structural current account positions.

JEL Classifications: F32, F41

Keywords: Current account | Habit persistence | Liquidity constraint | Transition economies
TOOLS
PDF Links  PDF Links
Full text via DOI  Full text via DOI
Download Citation  Download Citation
Supplement  Supplement
  E-Mail
Share:      
METRICS
7
Crossref
0
Scopus
1,483
View
3
Download
Real Convergence in the New Member States: Myth or Reality?  2009 June;24(2)
Editorial Office
Center for Economic Integration, Sejong Institution, Sejong University, 209, Neungdong-Ro, Gwangjin-Gu,
Seoul, 05006, Korea
TEL : +82-2-3408-3338    FAX : +82-2-3408-3338   E-mail : jei@sejong.ac.kr
Browse Articles |  Current Issue |  For Authors and Reviewers |  About
Copyright© by Center for Economic Integration. All right reserved.