Current Account and Real Exchange Rate Dynamics in the G-7 Countries
IMF Working Papers, August 1, 2002
Source details
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- Current Account and Real Exchange Rate Dynamics in the G-7 Countries
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Bibliographic details
- Authors: Menzie David Chinn, Jaewoo Lee
- Published: August 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451855203.001
Research question and methodology
- Tests canonical predictions of intertemporal open-economy macro models.
- Uses a structural VAR analysis of Group of Seven countries.
- Identification approach: adopts minimal assumptions for identification.
Main findings
- Permanent shocks:
- Have large long-term effects on the real exchange rate.
- Have relatively small effects on the current account.
- Temporary shocks:
- Have large effects on the current account and exchange rate in the short run.
- Do not have large effects on either variable in the long run.
- Some impulse-response signs point toward models that differentiate tradables and nontradables.
Subjects and keywords (as presented)
- Subjects: Balance of payments, Current account, Current account balance, Exchange rate adjustments, Exchange rates, Foreign exchange, Real exchange rates.
- Keywords: current account, Current account balance, current account effect, current account improvement, current account innovation, Exchange rate adjustments, exchange rate effect, exchange rate fluctuation, Exchange rates, Global, intertemporal models, permanent and temporary shocks, real exchange rate, Real exchange rates, U.K. exchange rate difference, WP.
Source: IMF Working Paper "Current Account and Real Exchange Rate Dynamics in the G-7 Countries" by Menzie David Chinn and Jaewoo Lee (August 1, 2002).
Content in this bundle
- Current Account and Real Exchange Rate Dynamics in the G-7 Countries - WP/02/130