Dominant Drivers of Current Account Dynamics

Download or read book Dominant Drivers of Current Account Dynamics written by Lukas Boer and published by International Monetary Fund. This book was released on 2024-04-26 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate shocks that explain most of the variation in the current account at business cycle frequencies and over the long run. We then explore, using a standard open-economy macro model, which macroeconomic shocks are behind the empirical dominant drivers of the current account at business-cycle frequency. Rather than financial shocks or aggregate shocks to supply or demand, shocks to the relative demand between home and foreign goods are found to play a pivotal role in current account dynamics.