Revisiting the Glick–Rogoff Current Account Model: An Application to the Current Accounts of BRICS Countries

Yushi Yoshida and Weiyang Zhai
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Weiyang Zhai: Shiga University

A chapter in Recent Econometric Techniques for Macroeconomic and Financial Data, 2021, pp 265-291 from Springer

Abstract: Abstract Understanding what drives the changes in current accounts is one of the most important macroeconomic issues for developing countries. Excessive surpluses in current accounts can trigger trade wars, and excessive deficits in current accounts can, on the other hand, induce currency crises. The Glick–Rogoff (1995, Journal of Monetary Economics) model, which emphasizes productivity shocks at home and in the world, fit well with developed economies in the 1970s and 1980s. However, the Glick–Rogoff model fits poorly when it is applied to fast-growing BRICS countries for the period including the global financial crisis. We conclude that different mechanisms of current accounts work for developed and developing countries.

Keywords: BRICS countries; Current accounts; Glick–Rogoff model; Global financial crisis; Productivity shock (search for similar items in EconPapers)
Date: 2021
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Working Paper: Revisiting the Glick-Rogoff Current Account Model: An Application to the Current Accounts of BRICS Countries (2020)
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DOI: 10.1007/978-3-030-54252-8_10

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