Tariffs and the Current Account: The Role of Initial Distortions

1990 ◽  
Vol 23 (2) ◽  
pp. 348 ◽  
Author(s):  
Jonathan D. Ostry
Keyword(s):  
Current Account ◽  
The Current Account

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.

scholarly journals The Role of Sovereign Wealth Funds in Promoting the External Stability of the Home Economy

2018 ◽  
Vol 5 (9) ◽  
pp. 96
Author(s):  
Osama El-Baz
Keyword(s):  
Current Account ◽  
Global Economy ◽  
Government Expenditure ◽  
Dynamic Panel Data ◽  
Current Account Balance ◽  
Sovereign Wealth Funds ◽  
Data Set ◽  
External Stability ◽  
The Current Account

<p>Sovereign Wealth Funds (SWFs) are currently playing an important role in the global economy. We investigated the role of SWFs in promoting the external stability of the home economy using a data set spanning 106 countries over the period (1997-2015), whereby Arellano- Bond dynamic panel data models were employed to assess the treatment effect of SWFs on both the level of the current account balance and its volatility. Empirical results revealed that SWFs can play an important role in smoothing the management of the current account balance in the long run. Nonetheless, commodity-based SWFs are expected to outperform non-commodity based SWFs in this respect. Our policy recommendation is that emerging economies should consider the establishment of SWFs to enhance the external stability of their home economies, allocating privatization proceeds to these investment vehicles to protect the rights of future generations in benefiting from them rather than directing such proceeds to finance current government expenditure and budget deficit. Finally, attention should be paid to the implementation of the generally accepted principles and practices when establishing SWFs to ensure their ability to function properly.  </p>

scholarly journals Contradicting the twin deficits hypothesis: The role of tax revenues composition

2014 ◽  
Vol 61 (6) ◽  
pp. 653-667 ◽  
Author(s):  
Alka Obadic ◽  
Tomislav Globan ◽  
Ozana Nadoveza
Keyword(s):  
Current Account ◽  
Economic Transformation ◽  
Current Account Balance ◽  
Twin Deficits ◽  
Main Hypothesis ◽  
Tax Revenues ◽  
Fiscal Balance ◽  
Tax Systems ◽  
The Current Account

The general theory of twin deficits hypothesis does not consider specific characteristics of domestic tax systems, i.e. whether the revenue side of the budget is dominated by indirect or by direct taxes. The main hypothesis of the paper is that in countries with fiscal systems dominated by indirect taxes, the deterioration of the current account balance would imply higher fiscal revenues due to larger imports and consumption. The hypothesis is based on the characteristics of domestic tax systems of Bulgaria, Croatia, Poland and Romania in which indirect tax revenues account for the majority of total budget tax revenues. Results suggest that the co-movements of the current account and the fiscal balance cannot be explained by the twin deficit theory in countries with indirect tax-oriented systems. These results imply that only the structural economic transformation and export orientation of the economy may reverse the causality direction between two deficits.

Demographic Dynamics, Savings, Investment and Current Account

2018 ◽  
Vol 3 (2) ◽  
Author(s):  
Antonin Rusek
Keyword(s):  
Current Account ◽  
Dominant Role ◽  
Population Group ◽  
Current Account Dynamics ◽  
Floating Exchange Rate ◽  
Stabilization Policies ◽  
Current Account Imbalances ◽  
Demographic Dynamic ◽  
The Current Account

<p class="Default">The upturn in the world economy brought with it the renewed attention to the issues of current account imbalances. Whereas large part of it is political, the issue still attracts some economic attention. In this paper the empirical side of the current account dynamics is addressed. We enquire of the relationships between the current account and savings dynamics, with the emphasis on the role of the “high savings” demographic cohorts (the population and/or labor force between 40 and 64). With the emphasis on the EUs “large” countries, we conclude that there is a significant role of this “high saving” population group in determining the current account dynamics for the consistent “high” surpluses countries of Germany and Netherlands.</p><p class="Default">The role of this population group is, however, rejected for France, Italy and Spain. In those countries the current account dynamics is dominated by (seemingly unexpected) liberalization of capital flows and the subsequent need for stabilization policies.  Similarly, the dominant role of the demographic dynamic is rejected for the comparison, floating exchange rate countries of USA and Japan.</p>

The Impact of Income Distribution on the Current Account

2016 ◽  
Vol 7 (2) ◽  
Author(s):  
Jorge Eduardo Carrera ◽  
Esteban Rodriguez ◽  
Mariano Sardi
Keyword(s):  
Current Account ◽  
Developing Economies ◽  
Control Variables ◽  
Wage Share ◽  
Fiscal Balance ◽  
Functional Distribution ◽  
The Impact ◽  
The Relationship ◽  
The Current Account

AbstractThis paper analyzes the relationship between inequality and the current account, addressing the role of the functional distribution of income. Using panel data for 60 countries over the period 1975–2011, our results confirm that an increase in the wage share is associated with a decrease in the current account. We also analyze the effects of wage share on saving and investment, maintaining the same control variables. We find that the wage share is negatively correlated with saving and does not have a significant effect on investment. This result is consistent with the theories that connect higher wages with greater consumption and less saving. The relationship is stronger for developing economies, highlighting the structural differences between different groups of countries. Specifically, the relevance and sign of control variables like financial intermediation, fiscal balance, demographic ratios, capital account openness and growth expectations show important differences according to the level of development.

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