Skip to main content

Transitory and permanent disturbances and the current account: an empirical analysis in the intertemporal framework

Buy Article:

$55.00 plus tax (Refund Policy)

The intertemporal models of current account determination demonstrate that in the analysis of the current account balance of a country, it is important to distinguish between transitory and permanent disturbances in income and relative prices. This paper attempts to decompose the observed data on income and real exchange rate into transitory and permanent components and then uses the decomposed series to test the empirical validity of the predictions of the intertemporal models. Evidence from the United States and Japan provide very limited support for the intertemporal models in terms of the effects of transitory and permanent changes in income on current account balance. For both US and Japan, the study finds that permanent changes in real exchange rate have significant effects on the current account balance. Statistical tests find no evidence of hysteresis in the trading relations of the two countries.
No Reference information available - sign in for access.
No Citation information available - sign in for access.
No Supplementary Data.
No Data/Media
No Metrics

Document Type: Research Article

Publication date: 1999-08-01

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more