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Consumption tilting and the current account: Evidence from Canada

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  • Braeu, Rebecca
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    Abstract

    This paper estimates the consumption tilting motive in Canada. A common empirical technique (vector-error correction model) is applied to a well-established theory (the small-open economy present-value model) in order to estimate the long-run behavior of the current account. The results suggest that households are patient. They modify intertemporal consumption profiles in order to tilt consumption toward the future through the accumulation of wealth, which improves the current account in the long run.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 19 (2010)
    Issue (Month): 2 (April)
    Pages: 304-312

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    Handle: RePEc:eee:reveco:v:19:y:2010:i:2:p:304-312

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    Web page: http://www.elsevier.com/locate/inca/620165

    Related research

    Keywords: Current account Wealth Consumption tilting Cointegration;

    References

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