Current Accounts and Exchange Rates: A New Look at the Evidence
AbstractThis paper 'goes back to basics' in empirical analysis of the J-Curve. First, we document strong violations in the distributional assumptions that underlie nearly all previous work on this issue. Second, we employ distribution-free, non-parametric statistical tests to characterize the data and summarize the key relationships between real exchange rates, the current account, and real GDP. We find some (weak) evidence of a J-Curve in the data. Interestingly, however, we document that this evidence is not consistent with the standard theoretical explanation of the J-Curve. Consequently, our empirical results pose a strong challenge for international economic theory.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8361.
Date of creation: Jul 2001
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Publication status: published as Leonard, Greg and Alan C. Stockman. "Current Accounts And Exchange Rates: A New Look At The Evidence," Review of International Economics, 2002, v10(3,Aug), 483-496.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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- Leonard, Greg & Stockman, Alan C, 2002. "Current Accounts and Exchange Rates: A New Look at the Evidence," Review of International Economics, Wiley Blackwell, vol. 10(3), pages 483-96, August.
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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