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

Weiyang Zhai and Yushi Yoshida

MPRA Paper from University Library of Munich, Germany

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)
JEL-codes: F32 F41 (search for similar items in EconPapers)
Date: 2020-04-01
New Economics Papers: this item is included in nep-cis and nep-opm
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Related works:
Chapter: Revisiting the Glick–Rogoff Current Account Model: An Application to the Current Accounts of BRICS Countries (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99446

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