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Current Acounts in Debtor and Creditor Countries

Author

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  • Kraay, A.
  • Ventura, J.

Abstract

This paper reexamines a classic question in international economics: What is the current account response to a transitory income shock such as a temporary improvement in the terms of trade, a tranfer form abroad or unusually high production? To answer this question, we construct a world equilibrium model in which productivity varies across countries and international borrowing and lending takes place to exploit a good investment opportunities.

Suggested Citation

  • Kraay, A. & Ventura, J., 1997. "Current Acounts in Debtor and Creditor Countries," Working papers 97-12, Massachusetts Institute of Technology (MIT), Department of Economics.
    • Handle: RePEc:mit:worpap:97-12
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    References listed on IDEAS

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    1. Lewis, Karen K., 1995. "Puzzles in international financial markets," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 37, pages 1913-1971, Elsevier.
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    13. Matsuyama, Kiminori, 1987. "Current account dynamics in a finite horizon model," Journal of International Economics, Elsevier, vol. 23(3-4), pages 299-313, November.
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    More about this item

    Keywords

    INTERNATIONAL ECONOMY ; TERMS OF TRADE;

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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