EconPapers    
Economics at your fingertips  
 

Current Account Dynamics in a Small Open Economy Model of Status Seeking

Walter Fisher

No 107, Economics Series from Institute for Advanced Studies

Abstract: In this paper we will use a status-preference framework, together with a standard cost of adjustment investment function, to study the dynamics of the small open economy current account balance. We demonstrate that the transitional dynamics of the economy is characterized by two speeds of adjustment: a speed of adjustment arising from status-preference and a speed of adjustment arising from installation costs of investment. This structure implies that the current account balance depends on both speeds of adjustment as well as on the long-run equilibrium. As a consequence, the current account can exhibit non-monotonic behavior in transition to the steady state.

Keywords: Current account; Status seeking; Relative wealth; Open economy dynamics (search for similar items in EconPapers)
JEL-codes: E21 F41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2001-10
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.ihs.ac.at/publications/eco/es-107.pdf First version, 2001 (application/pdf)

Related works:
Journal Article: Current Account Dynamics in a Small Open‐Economy Model of Status Seeking* (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ihs:ihsesp:107

Ordering information: This working paper can be ordered from
Institute for Advanced Studies - Library, Josefstädterstr. 39, A-1080 Vienna, Austria

Access Statistics for this paper

More papers in Economics Series from Institute for Advanced Studies Josefstädterstr. 39, A-1080 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Doris Szoncsitz ().

 
Page updated 2020-06-01
Handle: RePEc:ihs:ihsesp:107