{
  "title": "A Quantitative Examination of Current Account Dynamics in Equilibrium Models of Barter Economies",
  "publication": "IMF Working Papers, February 1, 1992",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764",
  "overlayPath": "/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/index.md",
  "summary": "This paper provides a numerical analysis of an intertemporal equilibrium model of a small open, barter economy that is subject to random shocks affecting endowments, the terms of trade, and the real interest rate.",
  "sections": [
    {
      "heading": "Summary of the paper",
      "content": "- Provides a numerical analysis of an intertemporal equilibrium model of a small open, barter economy subject to random shocks affecting endowments, the terms of trade, and the real interest rate.\n- Computes equilibrium stochastic processes for macroeconomic aggregates and compares their properties with observed stylized facts.\n- The model mimics the Harberger-Laursen-Metzler effect but cannot account for:\n  - a countercyclical trade balance,\n  - the variability of the real exchange rate,\n  - the income elasticity of imports.\n- Shows that, under incomplete insurance markets, the correlation between the trade balance and the terms of trade is sensitive to:\n  - changes in preference parameters,\n  - changes in the persistence of exogenous shocks."
    },
    {
      "heading": "Key findings and empirical comparisons",
      "content": "- The model reproduces the Harberger-Laursen-Metzler effect.\n- The model fails to replicate three observed stylized facts:\n  - countercyclical trade balance,\n  - variability of the real exchange rate,\n  - income elasticity of imports.\n- The correlation between the trade balance and the terms of trade is not robust; it varies with preference parameters and shock persistence when insurance markets are incomplete."
    },
    {
      "heading": "Model scope and shocks analyzed",
      "content": "- Economy type: small open, barter economy.\n- Exogenous stochastic disturbances considered:\n  - endowment shocks,\n  - terms-of-trade shocks,\n  - real interest rate shocks.\n- Equilibrium objects computed: stochastic processes for macroeconomic aggregates."
    },
    {
      "heading": "Subjects and keywords (as listed)",
      "content": "- Subjects: Consumption, Financial markets, Imports, International trade, National accounts, Securities markets, Terms of trade, Trade balance.\n- Keywords: balance of trade, Consumption, countercyclical trade balance, cross-expenditure effect, detrended trade balance, Imports, real interest rate, Securities markets, standard deviation, Terms of trade, terms-of-trade disturbance, terms-of-trade shock, Trade balance, trade-balance behavior, WP.\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/bundle-manifest.json)",
    "Authors: Enrique G. Mendoza",
    "Published: February 1, 1992",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451924121.001",
    "Provides a numerical analysis of an intertemporal equilibrium model of a small open, barter economy subject to random shocks affecting endowments, the terms of trade, and the real interest rate.",
    "Computes equilibrium stochastic processes for macroeconomic aggregates and compares their properties with observed stylized facts.",
    "The model mimics the Harberger-Laursen-Metzler effect but cannot account for:",
    "Shows that, under incomplete insurance markets, the correlation between the trade balance and the terms of trade is sensitive to:",
    "The model reproduces the Harberger-Laursen-Metzler effect.",
    "The model fails to replicate three observed stylized facts:",
    "The correlation between the trade balance and the terms of trade is not robust; it varies with preference parameters and shock persistence when insurance markets are incomplete.",
    "Economy type: small open, barter economy.",
    "Exogenous stochastic disturbances considered:",
    "Equilibrium objects computed: stochastic processes for macroeconomic aggregates.",
    "Subjects: Consumption, Financial markets, Imports, International trade, National accounts, Securities markets, Terms of trade, Trade balance.",
    "Keywords: balance of trade, Consumption, countercyclical trade balance, cross-expenditure effect, detrended trade balance, Imports, real interest rate, Securities markets, standard deviation, Terms of trade, terms-of-trade disturbance, terms-of-trade shock, Trade balance, trade-balance behavior, WP."
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/index.md",
    "json": "/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/30/a-quantitative-examination-of-current-account-dynamics-in-equilibrium-models-of-barter-764/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T05:17:26.958Z"
}