The present-value model of the current account has been rejected
Subtitle: round up the usual suspects
By: James M. Nason, John H. Rogers.
Contributors: Rogers, John Harold.
Series: International finance discussion papers ;; no. 760; International finance discussion papers (Online) ;; no. 760.
Publisher: Federal Reserve Board
Published: 2003
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Description: "Tests of the present-value model of the current account are frequently rejected by the data.  Standard explanations rely on the "usual suspects" of non-separable preferences, shocks to fiscal policy and the world real interest rate, and imperfect international capital mobility.  We confirm these rejections on post-war Canadian data, then investigate their source by calibrating and simulating alternative versions of a small open economy, real business cycle model.  Monte Carlo experiments reveal that, although each of the suspects matters in some way, a "canonical" RBC model moves closest to the data when it features exogenous world real interest rate shocks"--Federal Reserve Board web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 9/15/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.