A New Way of Thinking about the Current Account
Extending the theory of generational accounts, the author shows that the conventional current account is not related to the real effects of a country's fiscal policy. For any international array of fiscal policies, a country can implement its own policy so that the conventional government and current account deficits are zero in every period. The author argues that economists should develop a new measure of the current account. This measure is forward looking and keeps track of expected transfers between countries. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Volume (Year): 36 (1995)
Issue (Month): 3 (August)
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