A Derivation Of The Optimal Current Account Balance For Barbados, Jamaica And Trinidad And Tobago
AbstractHow can monetary authorities determine whether the current account balance is problematic? One method is based on the intertemporal consumption-smoothing model. This paper applies the intertemporal consumption-smoothing model - which is used to derive the optimal current account - to Barbados, Jamaica and Trinidad and Tobago. Once the optimal current account has been derived, it is then compared with actual current account balances and more stringent statistical tests to indicate the efficacy of the model. The findings indicate that the optimal consumption-smoothing model is neither applicable to Barbados nor Trinidad and Tobago, but in contrast, the optimal model that assumes no restrictions on capital flows is valid for Jamaica.
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Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 6 (2006)
Issue (Month): 1 ()
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Web page: http://www.usc.es/economet/eaa.htm
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
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