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Accounting for the Current Account Behavior in ASEAN-5

Evan Lau, Ahmad Zubaidi Baharumshah and Muzafar Shah Habibullah ()

MPRA Paper from University Library of Munich, Germany

Abstract: Current account are an endogenous variable that contain information about the behavior of the economics agents and is important for economic policymaking as it gives a broad reflection of the stance of macroeconomics policies. The imbalances in current account are a reflection of the forward-looking, dynamic saving and investment decisions in the intertemporal approach to current account modeling. This study empirically analyzed the anatomy of the dynamic current account behavior for the ASEAN-5 countries using present value model. Despite the simplicity, the statistical computations suggest that the agents behave as the forward-looking rational agents in the face of the shocks in the three out of five economies. This implies that the current account acts as a buffer to smooth the consumption in the presence of shock and optimally smoothing its consumption path for these countries.

Keywords: Current Account; Present Value Model; Consumption Smoothing; Consumption Tilting (search for similar items in EconPapers)
JEL-codes: F32 O53 E22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-mac
Date: 2007-01-03
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:1322

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