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Accounting for Global Dispersion of Current Accounts

Author

Listed:
  • Mr. Jaewoo Lee
  • Yongsung Chang
  • Sun-Bin Kim

Abstract

We undertake a quantitative analysis of the dispersion of current accounts in an open economy version of incomplete insurance model, incorporating important market frictions in trade and financial flows. Calibrated with conventional parameter values, the stochastic stationary equilibrium of the model with limited borrowing can account for about two-thirds of the global dispersion of current accounts. The easing of financial frictions can explain nearly all changes in the current account dispersion in the past four decades whereas the easing of trade frictions has almost no impact on the current account dispersion.

Suggested Citation

  • Mr. Jaewoo Lee & Yongsung Chang & Sun-Bin Kim, 2009. "Accounting for Global Dispersion of Current Accounts," IMF Working Papers 2009/276, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/276
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    Cited by:

    1. Kim, Soyoung & Lee, Jaewoo, 2015. "Imbalances over the Pacific," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 173-185.
    2. Peeters, Marga, 2010. "The changing pattern in international trade and capital flows of the Gulf cooperation council countries in comparison with other oil-exporting countries," MPRA Paper 23539, University Library of Munich, Germany.
    3. Michael Siemer & Adrien Verdelhan & Francois Gourio, 2015. "Uncertainty and International Capital Flows," 2015 Meeting Papers 880, Society for Economic Dynamics.
    4. Ricardo Reyes-Heroles, 2017. "The Role of Trade Costs in the Surge of Trade Imbalances," 2017 Meeting Papers 212, Society for Economic Dynamics.
    5. Christopher Andrew Hartwell, 2014. "Capital Controls and the Determinants of Entrepreneurship," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(6), pages 434-456, December.
    6. Gete, Pedro & Melkadze, Givi, 2018. "Aggregate volatility and international dynamics. The role of credit supply," Journal of International Economics, Elsevier, vol. 111(C), pages 143-158.
    7. Ito, Hiro & McCauley, Robert N., 2019. "A key currency view of global imbalances," Journal of International Money and Finance, Elsevier, vol. 94(C), pages 97-115.
    8. Haiping Zhang, 2023. "Trade‐induced sectoral upgrading and upstream financial flows," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 859-896, August.
    9. Luca Fornaro, 2018. "International Debt Deleveraging," Journal of the European Economic Association, European Economic Association, vol. 16(5), pages 1394-1432.
    10. Atish R Ghosh & Mahvash S Qureshi & Charalambos G Tsangarides, 2019. "Friedman Redux: External Adjustment and Exchange Rate Flexibility," The Economic Journal, Royal Economic Society, vol. 129(617), pages 408-438.
    11. Mr. Jörg Decressin & Mr. Emil Stavrev, 2009. "Current Accounts in a Currency Union," IMF Working Papers 2009/127, International Monetary Fund.
    12. Marga Peeters, 2010. "The changing pattern of international trade and capital flows of the GCC countries," European Economy - Economic Papers 2008 - 2015 415, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    13. Sposi, Michael, 2022. "Demographics and the evolution of global imbalances," Journal of Monetary Economics, Elsevier, vol. 126(C), pages 1-14.
    14. Mr. Damiano Sandri, 2011. "Precautionary Savings and Global Imbalances in World General Equilibrium," IMF Working Papers 2011/122, International Monetary Fund.
    15. Fogli, Alessandra & Perri, Fabrizio, 2015. "Macroeconomic volatility and external imbalances," Journal of Monetary Economics, Elsevier, vol. 69(C), pages 1-15.
    16. Marga PEETERS, 2011. "The Changing Pattern in International Trade and Capital Flows of the Gulf Cooperation Council Countries in Comparison with other Oil-Exporting Countries," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(7), pages 1-29, December.

    More about this item

    Keywords

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    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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