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Revisiting the Glick–Rogoff Current Account Model: An Application to the Current Accounts of BRICS Countries

In: Recent Econometric Techniques for Macroeconomic and Financial Data

Author

Listed:
  • Yushi Yoshida

    (Shiga University)

  • Weiyang Zhai

    (Shiga University)

Abstract

Understanding what drives the changes in current accounts is one of the most important macroeconomic issues for developing countries. Excessive surpluses in current accounts can trigger trade wars, and excessive deficits in current accounts can, on the other hand, induce currency crises. The Glick–Rogoff (1995, Journal of Monetary Economics) model, which emphasizes productivity shocks at home and in the world, fit well with developed economies in the 1970s and 1980s. However, the Glick–Rogoff model fits poorly when it is applied to fast-growing BRICS countries for the period including the global financial crisis. We conclude that different mechanisms of current accounts work for developed and developing countries.

Suggested Citation

  • Yushi Yoshida & Weiyang Zhai, 2021. "Revisiting the Glick–Rogoff Current Account Model: An Application to the Current Accounts of BRICS Countries," Dynamic Modeling and Econometrics in Economics and Finance, in: Gilles Dufrénot & Takashi Matsuki (ed.), Recent Econometric Techniques for Macroeconomic and Financial Data, pages 265-291, Springer.
    • Handle: RePEc:spr:dymchp:978-3-030-54252-8_10
    DOI: 10.1007/978-3-030-54252-8_10
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    References listed on IDEAS

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    More about this item

    Keywords

    BRICS countries; Current accounts; Glick–Rogoff model; Global financial crisis; Productivity shock;
    All these keywords.

    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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