Asset Price And Current Account Dynamics
We examine the interaction between asset market and current account in a small open economy. In an overlapping generations economy in which land and money are available assets, the interaction between the land price and current account dynamics is shown to generate a plausible (asset price) specie-flow mechanism. We apply them to a number of issues. Domestic credit policy is neutral in the long run: one unit of foreign reserve increase offsets one unit of credit reduction. Next, the association between the endowment of land and foreign asset accumulation depends on parameters of the model. Finally, we examine the dynamic adjustment s following a once-and-for-all capital inflow. When the adjustment involves running current account deficit, the recipient country's foreign reserve position is permanently lowered. Furthermore, the steady state level of national wealth is permanently reduced. [E4, F3]
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 15 (2001)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RIEJ20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RIEJ20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Obstfeld, Maurice & Rogoff, Kenneth, 1995.
"The intertemporal approach to the current account,"
Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 34, pages 1731-1799
- Maurice Obstfeld and Kenneth Rogoff., 1994. "The Intertemporal Approach to the Current Account," Center for International and Development Economics Research (CIDER) Working Papers C94-044, University of California at Berkeley.
- Maurice Obstfeld & Kenneth Rogoff, 1994. "The Intertemporal Approach to the Current Account," NBER Working Papers 4893, National Bureau of Economic Research, Inc.
- Obstfeld, Maurice & Rogoff, Kenneth, 1994. "The Intertemporal Approach to the Current Account," Center for International and Development Economics Research (CIDER) Working Papers 233395, University of California-Berkeley, Department of Economics.
- Calvo, Guillermo A & Rodriguez, Carlos Alfredo, 1977. "A Model of Exchange Rate Determination under Currency Substitution and Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 617-625, June.
- Cesarano, Filippo, 1998. "Hume's specie-flow mechanism and classical monetary theory: An alternative interpretation," Journal of International Economics, Elsevier, vol. 45(1), pages 173-186, June.
- Sachs, Jeffrey & Boone, Peter, 1988. "Japanese structural adjustment and the balance of payments," Journal of the Japanese and International Economies, Elsevier, vol. 2(3), pages 286-327, September.
- Robert Brandon Kahn & Adam Bennett & María Vicenta Carkovic S. & Susan M Schadler, 1993. "Recent Experiences with Surges in Capital Inflows," IMF Occasional Papers 108, International Monetary Fund.
- Matsuyama, Kiminori, 1990. "Residential investment and the current account," Journal of International Economics, Elsevier, vol. 28(1-2), pages 137-153, February.
- Murray C. Kemp, 1970. "The Balance of Payments and the Terms of Trade in Relation to Financial Controls," Review of Economic Studies, Oxford University Press, vol. 37(1), pages 25-31.
- Jonathan Eaton, 1987. "A Dynamic Specific-Factors Model of International Trade," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 325-338.
- Jonathan Eaton, 1984. "A Dynamic Specific-Factors Model of International Trade," NBER Working Papers 1479, National Bureau of Economic Research, Inc.
- Jeffrey Sachs & Peter Boone, 1988. "Japanese Structural Adjustment and the Balance of Payments," NBER Working Papers 2614, National Bureau of Economic Research, Inc.
- Dornbusch, Rudiger & Giovannini, Alberto, 1990. "Monetary policy in the open economy," Handbook of Monetary Economics,in: B. M. Friedman & F. H. Hahn (ed.), Handbook of Monetary Economics, edition 1, volume 2, chapter 23, pages 1231-1303 Elsevier.
- F. H. Hahn, 1959. "The Balance of Payments in a Monetary Economy," Review of Economic Studies, Oxford University Press, vol. 26(2), pages 110-125.
- Reinhart, Carmen & Leiderman, Leonardo, 1994. "Capital inflows to Latin America," MPRA Paper 13406, University Library of Munich, Germany. Full references (including those not matched with items on IDEAS)