Accounting for the Current Account Behavior in ASEAN-5
Evan Lau (),
Ahmad Zubaidi Baharumshah () and
Muzafar Shah Habibullah ()
MPRA Paper from University Library of Munich, Germany
Current account are an endogenous variable that contain information about the behavior of the economics agents and is important for economic policymaking as it gives a broad reflection of the stance of macroeconomics policies. The imbalances in current account are a reflection of the forward-looking, dynamic saving and investment decisions in the intertemporal approach to current account modeling. This study empirically analyzed the anatomy of the dynamic current account behavior for the ASEAN-5 countries using present value model. Despite the simplicity, the statistical computations suggest that the agents behave as the forward-looking rational agents in the face of the shocks in the three out of five economies. This implies that the current account acts as a buffer to smooth the consumption in the presence of shock and optimally smoothing its consumption path for these countries.
Keywords: Current Account; Present Value Model; Consumption Smoothing; Consumption Tilting (search for similar items in EconPapers)
JEL-codes: F32 O53 E22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1322
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