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Intertemporal Current Account and Productivity Shocks: Evidence for Some European Countries

  • Fernando Pérez de Gracia
  • Juncal Cuñado

In most intertemporal models of the current account, country specific productivity has ambiguous effects on the current account depending on whether consumption effect or investment effect dominates. The objective of this paper is to investigate the role of productivity shocks, in combination with investment behavior, as a source for current account dynamics for some European countries during the period 1960-2000. We decompose total productivity shocks between global and specific shocks and we examine the role of global and country specific productivity shocks for the current account and investment dynamics.

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Paper provided by FEDEA in its series Working Papers on International Economics and Finance with number 01-05.

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