Aggregate Demand Shocks and Current Account Asymmetry: Some Empirical Evidence

Hassan Mohammadi, James Payne and Naiwei Sun
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Naiwei Sun: Department of Economics, Illinois State University, Postal: 100 N University St # 142 Normal IL 61761-4402 USA, http://www.cob.ilstu.edu/

Economia Internazionale / International Economics, 2005, vol. 58, issue 2, 223-239

Abstract: The response of the current account to monetary and fiscal shocks and real oil price shocks are examined using quarterly data for the United Kingdom over the flexible exchange rate period. We find statistical support for the existence of long-run asymmetries in the current account response to monetary shocks. However, there is no support for the existence of such asymmetries in fiscal shocks. These findings are broadly consistent with the new Keynesian interpretation of economic performance.

Keywords: Current Account; Asymmetries; Monetary Policy; Fiscal Policy (search for similar items in EconPapers)
JEL-codes: E12 E13 E63 F32 F41 (search for similar items in EconPapers)
Date: 2005
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