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الحساب الجاري في المدى البعيد عبر نموذج داخلي الزمن
[The Current Account in the Long Run through the Intertemporal Model]

Author

Listed:
  • Ghassan, Hassan B.
  • Al-Jefri, Essam H.

Abstract

This paper analyses the current account in the intertemporal model framework. Based on Obstfeld and Rogoff’s book (1996), we aim to model the ratio of the current account to GDP explicitly in the long run. Also, we criticize the tautological approach in the paper of Cerrato et al. (2014) which supposes a strong hypothesis that the output growth is the sum of the population growth and the per-capita GDP growth. This hypothesis leads to the identical equation of the ratio current account to GDP expressed by level or per capita. In this paper, we consider the overlapping generations to determine precisely the equation of the per-capita current account using the relevant variables. Then, this model appears more interesting and testable. It allows to verify the validity of the intertemporal model of the current account through the semi-elasticity of the ratio of per-capita current account to the per-capita GDP to the per-capita GDP growth or the per-capita consumption growth.

Suggested Citation

  • Ghassan, Hassan B. & Al-Jefri, Essam H., 2015. "الحساب الجاري في المدى البعيد عبر نموذج داخلي الزمن [The Current Account in the Long Run through the Intertemporal Model]," MPRA Paper 66527, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66527
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    References listed on IDEAS

    as
    1. Mr. Damiano Sandri, 2011. "Precautionary Savings and Global Imbalances in World General Equilibrium," IMF Working Papers 2011/122, International Monetary Fund.
    2. Hoffmann, Mathias, 2013. "What drives China's current account?," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 856-883.
    3. Karras, Georgios, 2009. "Demographic Change and the Current Account: Theory and Empirical Evidence," The Journal of Economic Asymmetries, Elsevier, vol. 6(1), pages 1-14.
    4. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, April.
    5. Dennis Tao Yang & Junsen Zhang & Shaojie Zhou, 2012. "Why Are Saving Rates So High in China?," NBER Chapters, in: Capitalizing China, pages 249-278, National Bureau of Economic Research, Inc.
    6. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
    7. Jeffrey D. Sachs, 1982. "Aspects of the Current Account Behavior of OECD Economies," NBER Working Papers 0859, National Bureau of Economic Research, Inc.
    8. Mario Cerrato & Huseyin Kalyoncu & Naveed Hassan Naqvi & Christopher Tsoukis, 2015. "Current Accounts in the Long Run and the Intertemporal Approach: A Panel Data Investigation," The World Economy, Wiley Blackwell, vol. 38(2), pages 340-359, February.
    9. Aizenman, Joshua & Sun, Yi, 2010. "Globalization and the sustainability of large current account imbalances: Size matters," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 35-44, March.
    10. Kano, Takashi, 2008. "A structural VAR approach to the intertemporal model of the current account," Journal of International Money and Finance, Elsevier, vol. 27(5), pages 757-779, September.
    11. Òscar Jordà & Moritz Schularick & Alan M Taylor, 2011. "Financial Crises, Credit Booms, and External Imbalances: 140 Years of Lessons," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(2), pages 340-378, June.
    12. Richard Bellman, 1957. "On a Dynamic Programming Approach to the Caterer Problem--I," Management Science, INFORMS, vol. 3(3), pages 270-278, April.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Current account; Intertemporal Model; Long-run; Per-capita GDP; Consumption.;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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