Austerity*

2020 ◽  
Author(s):  
Harris Dellas ◽  
Dirk Niepelt
Keyword(s):  
Interest Rate ◽  
Current Account ◽  
Private Information ◽  
Investment Decisions ◽  
Borrowing Constraints ◽  
Current Consumption ◽  
Separating Equilibrium ◽  
The Current Account

Abstract We study the optimal debt and investment decisions of a sovereign with private information. The separating equilibrium is characterized by a cap on the current account. A sovereign repays debt amount due that exceeds default costs in order to signal creditworthiness and smooth consumption. Accepting funding conditional on investment/reforms relaxes borrowing constraints, even when investment does not create collateral, but it depresses current consumption. The model contains the signalling elements emphasized by creditors in the Greek austerity programs and is consistent with the reduction in the loans issued by Greece and their interest rate following the 2015 election.

scholarly journals Current account determinants in ASEAN 6

2018 ◽  
Vol 21 (2) ◽  
Author(s):  
Novi Ariyani ◽  
Fajar Wahyu Priyanto ◽  
Lilis Yuliati
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Current Account ◽  
Direct Investment ◽  
Domestic Product ◽  
Annual Data ◽  
The Current Account

This study aims to analyze the factors that influence the export activity in the ASEAN region countries such as Indonesia, Singapore, Thailand, Malaysia, Philippines and Vietnam during 2001 - 2016 by using annual data. The factors that influence gross domestic product (GDP), interest rate, foreign direct investment (FDI) and exchange rate. The method used in the research is panel Vector Error Correlation Model (PVECM). The results show that Gross Domestic Product (GDP) negatively affects the current account in the short term. The interest rate variable negatively affects the current account in the long term. The Foreign Direct Investment (FDI) variable negatively affects the current account in the long term. Furthermore, the exchange rate variable negatively affects the current account in the long term.

scholarly journals ANALISIS DINAMIS KETERKAITAN VARIABEL YANG MEMPENGARUHI NERACA TRANSAKSI BERJALAN INDONESIA TAHUN 2012

2020 ◽  
Vol 1 (2) ◽  
Author(s):  
Winta Ratna Sari
Keyword(s):  
Interest Rate ◽  
Current Account ◽  
Impulse Response Function ◽  
Secondary Data ◽  
Output Growth ◽  
Current Account Balance ◽  
Long Run ◽  
The Stability ◽  
The Current Account

This study was to analyze the contribution rate (the rupiah against the U.S. dollar), Libor Interest Rate, Inflation and Output Growth (GDP) of the current account balance in Indonesia. The data used in this study secondary data is sourced from Indonesia Financial Statistics. The data used is the data quarterly from the first quarter of 2000 up to 2010 fourth quarter. The results of the estimated Vector Autoregression (VAR) indicates that there is a relationship between the Current Account, Exchange Rate, Libor Interest Rate, Inflation and GDP at lag t-1. Impulse response function of the stability of the first note that all variables are in the long run that is over 5 years and tend to be stable. This means that in the short term variables that are used do not provide a meaningful contribution in the long term but will mutually contribute to each other. Variance Decomposition Based on these results, it is known that all variables contributed to the Current Account, but his greatest contribution is of the variable itself, this means that the current account tends to a variable receiving contributions rather than giving contributions

THE ROLE OF TWO INTEREST RATES IN THE INTERTEMPORAL CURRENT ACCOUNT MODEL

2012 ◽  
Vol 16 (S2) ◽  
pp. 176-189 ◽  
Author(s):  
Michał Rubaszek
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Current Account ◽  
Low Income ◽  
Developing Economies ◽  
Low Income Country ◽  
Interest Rate Spread ◽  
The Interest Rate ◽  
The Current Account

We analyze the role of the lending-deposit interest rate spread in the dynamics of the current account in developing countries. For that purpose, we extend the standard perfect-foresight intertemporal model of the current account for the existence of the interest rate spread and simulate the convergence path of developing economies. This model helps explain why in many cases it is optimal for a fast-growing, low-income country to run a balanced current account.

Pengaruh Nilai Tukar dan Suku Bunga Acuan Terhadap Neraca Transaksi Berjalan di Indonesia Periode 2005:1 – 2015: 1 (Pendekatan Error Correction Model)

MODUS ◽  
2016 ◽  
Vol 28 (1) ◽  
pp. 105
Author(s):  
Toni Saputra ◽  
R Maryatmo
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Current Account ◽  
Secondary Data ◽  
Analysis Tool ◽  
Short Term ◽  
Correction Model ◽  
The Exchange Rate ◽  
The Current Account

AbstrakPenelitian ini bertujuan untuk mengetahui dan menganalisis pengaruh nilai tukar dan suku bunga acuan terhadap neraca transaksi berjalan di Indonesia periode 2005:1- 2015:1. Data yang digunakan merupakan data sekunder. Data sekunder bersumber dari website Bank Indonesia. Alat analisis yang digunakan adalah Errror Correction Model (ECM). Selanjutnya analisis deskriptif digunakan untuk menjelaskan hasil penelitian.Penelitian ini menghasilkan dua hal. Pertama, dalam jangka pendek nilai tukar tidak berpengaruh terhadap neraca transaksi berjalan Indonesia. Dalam jangka panjang nilai tukar memiliki pengaruh positif dan signifikan terhadap neraca transaksi berjalan. Kedua, dalam jangka pendek suku bunga acuan tidak berpengaruh terhadap neraca transaksi berjalan Indonesia. Dalam jangka panjang suku bunga acuan memiliki pengaruh negatif terhadap neraca transaksi berjalan. Kata Kunci: neraca transaksi berjalan Indonesia, nilai tukar, suku bunga acuan, Errror Correction Model AbstractThis study aims to determine and analyze the effect of exchange rates and interest rates on current account in Indonesia from 2005: 1 to 2015: 1. The data used is secondary data. Secondary data is sourced from the website of Bank Indonesia. The analysis tool used is Errror Correction Model (ECM). Further descriptive analysis is used to explain the study results.This research resulted in two things. First, in the short term exchange rate has no effect on the current account in Indonesia. In the long term the exchange rate has a positive and significant impact on the current account. Second, in the short-term benchmark interest rate has no effect on the current account in Indonesia. In the long-term benchmark interest rate has a negative effect on the current account. Keywords: current account in Indonesia, the exchange rate, the benchmark interest rate, errror Correction Model

scholarly journals The Current Account Dynamics in Pakistan: An Intertemporal Optimisation Perspective.

2011 ◽  
Vol 50 (4II) ◽  
pp. 401-421 ◽  
Author(s):  
Tahir Mukhtar ◽  
Aliya H. Khan
Keyword(s):  
Interest Rate ◽  
Current Account ◽  
Open Economy ◽  
Empirical Studies ◽  
Extended Model ◽  
Present Value ◽  
Theoretical Understanding ◽  
Current Account Dynamics ◽  
Basic Model ◽  
The Current Account

The intertemporal approach has become a basic reference in open economy macroeconomics for the theoretical understanding of the current account. Since the early 1980s there has been substantial growth in the literature using this approach to analyse the behaviour of the current account movements for different countries and time periods. The theoretical refinements in the approach have led most of the empirical studies in the literature today to apply the basic present value model of current account (PVMCA) and its extended version to examine the fluctuations in the current account balances of both developed and developing countries. Using data on Pakistan over the period 1960 to 2009, the present study finds that the basic model fails to predict the dynamics of the actual current account. However, extending the basic model to capture variations in the world real interest rate and the real exchange rate significantly improves the fit of the intertemporal model. The extended model predictions better replicate the volatility of current account data and better explain historical episodes of current account imbalance in Pakistan. JEL classification: C32, F32, F41 Keywords: Current Account, Present Value Models, Consumption-based Interest Rate, Pakistan

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