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The Current Account in the Macroeconomic Adjustment Process

Jeffrey D. Sachs

Title:
The Current Account in the Macroeconomic Adjustment Process
Author(s):
Sachs, Jeffrey D.
Date:
Type:
Working papers
Department:
Earth Institute
Permanent URL:
Part Number:
796
Publisher:
National Bureau of Economic Research
Publisher Location:
Cambridge, Mass.
Abstract:
This paper provides a formal analysis of the current account balance in a dynamic model with optimizing agents. Two analytical ideas are stressed. First, an economy's current account balance depends as much on fixture economic trends as on the current economic environment. A shift in fiscal policy, for example, will have one effect on the current account if it is perceived to be temporary and another if it is seen to be permanent. Second, temporary disturbances in the economy have permanent effects, by altering the entire future path of the economy's international indebtedness.
Subject(s):
Economic theory
Item views:
468
Metadata:
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