{
  "title": "Dominant Drivers of Current Account Dynamics",
  "publication": "IMF Working Papers, April 26, 2024",
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  "summary": "We estimate shocks that explain most of the variation in the current account at business cycle frequencies and over the long run.",
  "sections": [
    {
      "heading": "Summary and main findings",
      "content": "- We estimate shocks that explain most of the variation in the current account at business cycle frequencies and over the long run.\n- Using a standard open-economy macro model, we explore which macroeconomic shocks are behind the empirical dominant drivers of the current account at business-cycle frequency.\n- Shocks to the relative demand between home and foreign goods are found to play a pivotal role in current account dynamics.\n- Rather than financial shocks or aggregate shocks to supply or demand, relative-demand shocks primarily drive current account movements at business-cycle frequency."
    },
    {
      "heading": "Methodology overview",
      "content": "- Empirical estimation of shocks that account for the bulk of current account variation at business-cycle frequencies and over the long run.\n- Structural exploration using a standard open-economy macro model to map empirical dominant drivers to macroeconomic shock types.\n- Focused comparison across financial shocks, aggregate supply shocks, aggregate demand shocks, and relative-demand shocks."
    },
    {
      "heading": "Key statistics and bibliographic data",
      "content": "- Authors: Lukas Boer, Jaewoo Lee\n- Publication date: April 26, 2024\n- Series: Working Paper No. 2024/092\n- Issue: 092\n- Volume: 2024\n- Pages: 47\n- DOI: https://doi.org/10.5089/9798400274961.001\n- Stock No: WPIEA2024092\n- ISBN: 9798400274961\n- ISSN: 1018-5941"
    },
    {
      "heading": "Subject classification and keywords",
      "content": "- Subject: Balance of payments, Business cycles, Current account, Current account balance, Economic growth, Exchange rates, Foreign exchange, Nominal effective exchange rate\n- Keywords: Business cycles, business-cycle frequency, CA shock, Current Account, Current account balance, current account dynamics, Exchange Rates, Global, IMF working paper 24/92, impulse response, Nominal effective exchange rate, Open- Economy Model, Relative Demand"
    },
    {
      "heading": "Implications for analysis and policy (inferred from findings)",
      "content": "- Analytical focus on relative-demand shocks is critical for understanding current account dynamics at business-cycle frequencies.\n- Policy analysis and forecasting should incorporate measures of relative demand between domestic and foreign goods, alongside traditional financial and aggregate shock assessments.\n\nIMF Working Papers — Dominant Drivers of Current Account Dynamics (Lukas Boer; Jaewoo Lee), April 26, 2024.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/04/26/dominant-drivers-of-current-account-dynamics-548374"
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    "Authors: Lukas Boer, Jaewoo Lee",
    "Published: April 26, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400274961.001",
    "We estimate shocks that explain most of the variation in the current account at business cycle frequencies and over the long run.",
    "Using a standard open-economy macro model, we explore which macroeconomic shocks are behind the empirical dominant drivers of the current account at business-cycle frequency.",
    "Shocks to the relative demand between home and foreign goods are found to play a pivotal role in current account dynamics.",
    "Rather than financial shocks or aggregate shocks to supply or demand, relative-demand shocks primarily drive current account movements at business-cycle frequency.",
    "Empirical estimation of shocks that account for the bulk of current account variation at business-cycle frequencies and over the long run.",
    "Structural exploration using a standard open-economy macro model to map empirical dominant drivers to macroeconomic shock types.",
    "Focused comparison across financial shocks, aggregate supply shocks, aggregate demand shocks, and relative-demand shocks.",
    "Authors: Lukas Boer, Jaewoo Lee",
    "Publication date: April 26, 2024",
    "Series: Working Paper No. 2024/092",
    "Issue: 092",
    "Volume: 2024",
    "Pages: 47",
    "DOI: https://doi.org/10.5089/9798400274961.001",
    "Stock No: WPIEA2024092",
    "ISBN: 9798400274961",
    "ISSN: 1018-5941",
    "Subject: Balance of payments, Business cycles, Current account, Current account balance, Economic growth, Exchange rates, Foreign exchange, Nominal effective exchange rate",
    "Keywords: Business cycles, business-cycle frequency, CA shock, Current Account, Current account balance, current account dynamics, Exchange Rates, Global, IMF working paper 24/92, impulse response, Nominal effective exchange rate, Open- Economy Model, Relative Demand",
    "Analytical focus on relative-demand shocks is critical for understanding current account dynamics at business-cycle frequencies.",
    "Policy analysis and forecasting should incorporate measures of relative demand between domestic and foreign goods, alongside traditional financial and aggregate shock assessments.",
    "**Working Paper**"
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