Long-Term Trends in the Saving-Investment Balance and Persistent Current Account Surpluses in a Small Open Economy: The Case of the Netherlands

May 1, 1996

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Format: Chicago

Ioannis Halikias. Long-Term Trends in the Saving-Investment Balance and Persistent Current Account Surpluses in a Small Open Economy: The Case of the Netherlands, (USA: International Monetary Fund, 1996) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper explores, from an investment-saving perspective, the factors underlying the persistent widening of the current account surplus in the Netherlands since the early 1980s. Standard intertemporal models, even appropriately extended to incorporate specific features of the Dutch economy, do not appear to fully account for this development. Accordingly, the paper focusses attention on the production side of the economy to gain further insight into the trends of the current account. Empirical evidence suggests that changes in relative factor prices and a relative demand shift toward non-tradable goods account for the bulk of the observed widening of the current account surplus. In turn, the impact of these factors on the current account appears to reflect both changes in factor proportions and deviations from perfect competition in the Dutch sheltered sector.

Subject: Balance of payments, Current account, Current account surpluses, Labor, Production, Real wages, Total factor productivity, Wages

Keywords: Current account, Current account surpluses, Global, Investment-saving ratio, Netherlands saving, Perfect competition, Persistent current, Real wages, Saving rate, Saving-investment balance, Saving-investment ratio, Total factor productivity, WP

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1996/042
Stock No:

WPIEA0421996
ISBN:

9781451975772
ISSN:

1018-5941

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