MONETARY POLICY, INVESTMENT DYNAMICS, AND THE INTERTEMPORAL APPROACH TO THE CURRENT ACCOUNT
Department of Economics from California Davis - Department of Economics
This paper applies the intertemporal approach to the current account to the case of monetary shocks. A two-country dynamic general equilibrium model with predetermined wages is proposed as a means to bridge the gap between Mundell-Fleming and modern intertemporal models. Early versions of Mundell-Fleming implied that a monetary expansion must necessarily improve the current account; the alternative result became a possibility in more contemporary versions when intertemporal features were introduced into the asset market. The present model suggests that when intertemporal features are also introduced into the other markets of the economy, the model's prediction is transformed yet further. A calibrated version of the model suggests a beggar-thy-neighbor improvement in the current account becomes unlikely for reasonable parameter values.
References: Add references at CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.ucdavis.edu/working_papers/97-13.pdf [301 Moved Permanently]--> https://www.econ.ucdavis.edu/working_papers/97-13.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fth:caldec:97-13
Access Statistics for this paper
More papers in Department of Economics from California Davis - Department of Economics University of California Davis - Department of Economics. One Shields Ave., California 95616-8578. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().