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Collateral Constraints And The Current Account: Theory And Evidence

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  • Takuma Kunieda
  • Keisuke Okada
  • Akihisa Shibata

Abstract

type="main" xml:id="ecin12251-abs-0001"> We investigate the impact of domestic financial frictions on the current account dynamics in Asian countries before and after the Asian financial crisis in 1997–1998 by introducing collateral constraints into the intertemporal current account approach. We examine six Asian countries. Before the crisis, collateral constraints significantly impact the current account in Korea, Malaysia, the Philippines, and Thailand, but after the crisis, they do not. Our study shows that the impact of domestic financial frictions on the current account changes before and after a financial crisis. (JEL F32, F41)

Suggested Citation

  • Takuma Kunieda & Keisuke Okada & Akihisa Shibata, 2016. "Collateral Constraints And The Current Account: Theory And Evidence," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 633-651, January.
    • Handle: RePEc:bla:ecinqu:v:54:y:2016:i:1:p:633-651
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    Cited by:

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    5. Jae Wook Jung & Kyunghun Kim, 2021. "Financial Market Integration and Income Inequality," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 25(2), pages 175-203.

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    More about this item

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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