Credit Constraints and the Current Account: A Test for the Japanese Economy

Takuma Kunieda and Akihisa Shibata

No 573, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper constructs a small open economy version of the Kiyotaki and Moore (1997) model along the line developed by Kasa (1998) and derives a closed-form solution of the current account dynamics. Using the solution, a null hypothesis of no credit constraints is tested for the Japanese economy. The empirical results show that the null hypothesis is strongly rejected and that the estimated signs of the parameters are consistent with the model. The Kiyotaki and Moore model gives an adequate description of the Japanese economy.

Keywords: Credit constraints; Current account; Japanese economy (search for similar items in EconPapers)
JEL-codes: E32 F41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2003-07
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Journal Article: Credit constraints and the current account: A test for the Japanese economy (2005)
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