What drives the current account in commodity exporting countries? The cases of Chile and New Zealand

Juan Medina, Anella Munro and Claudio Soto

No 247, BIS Working Papers from Bank for International Settlements

Abstract: This paper uses an open economy DSGE model with a commodity sector and nominal and real rigidities to ask what factors account for current account developments in two small commodity exporting countries. We estimate the model, using Bayesian techniques, on Chilean and on New Zealand data, and investigate the structural factors that explain the behaviour of the two countries' current accounts. We find that foreign financial conditions, investment-specific shocks, and foreign demand account for the bulk of the variation of the current accounts of the two countries. In the case of New Zealand fluctuations in commodity export prices have also been important. Monetary and fiscal policy shocks (deviations from policy rules) are estimated to have relatively small e ects on the current account.We find interesting differences in Chilean and New Zealand responses to some shocks, despite similarities between the two economies and the common structural model employed.

Keywords: current account; commodity price; small open economy; DSGE model (search for similar items in EconPapers)
Pages: 56 pages
Date: 2008-02
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.bis.org/publ/work247.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work247.htm (text/html)

Related works:
Chapter: What Drives the Current Account in Comodity Exporting Countries? The Cases of Chile and New Zealand (2008)
Journal Article: What Drives the Current Account in Commodity-Exporting Countries? The Cases of Chile and New Zealand (2007)
Working Paper: What Drives the Current Account in Commodity Exporting Countries? The Cases of Chile and New Zealand (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:247

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().