The Relative Dynamics of Investment and the Current Account in the G7-Economies

Mathias Hoffman
Authors registered in the RePEc Author Service: Mathias Hoffmann

Economic Journal, 2001, vol. 111, issue 471, C148-63

Abstract: This paper contributes to the empirics of the intertemporal approach to the current account. We use a cointegrated VAR framework to identify permanent and transitory components of country-specific and global shocks. Our approach allows us to investigate empirically the sensitivity to persistence implied by many forward-looking models and our results shed new light on the excess volatility of investment encountered by Glick and Rogoff (1995). In G7 data, we find the relative current-account and investment response to be in line with the intertemporal approach.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:econjl:v:111:y:2001:i:471:p:c148-63

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