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Granularity in the current account

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  • Koomen, Miriam
  • Wicht, Laurence

Abstract

We present new empirical evidence on the role of granularity in the current account (CA), using a unique and comprehensive firm-level dataset for Switzerland. We show that idiosyncratic shocks to large firms account for almost two thirds of the fluctuations in the headline CA and are the primary source of CA volatility. The granular effect is present across goods, services, and income components and persists over both short- and medium-term horizons. In addition to their direct impact, idiosyncratic shocks propagate through inter-firm linkages via input–output relationships and cross-product connections associated with multinational enterprise activity. Our findings complement standard macroeconomic models by providing a micro-founded perspective and demonstrating the importance of granularity in explaining fluctuations in external balances.

Suggested Citation

  • Koomen, Miriam & Wicht, Laurence, 2026. "Granularity in the current account," Journal of International Economics, Elsevier, vol. 163(C).
    • Handle: RePEc:eee:inecon:v:163:y:2026:i:c:s0022199626000152
    DOI: 10.1016/j.jinteco.2026.104225
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    Keywords

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    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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