The Current Account and Macroeconomic Adjustment in the 1970s

Abstract

The Current Account and Macroeconomic Adjustment i n t he 1970s DURING THE PAST DECADE, the behavior of international capital flows, current account balances, and exchange rates have puzzled economists and preoccupied policymakers. The period has been marked by widely fluctuating exchange rates, huge OPEC surpluses, burgeoning debt of less developed countries (LDCs) and unprecedented current account deficits in many developed countries. The nature, direction, and scope of international borrowing have also shifted dramatically. The proportion of private to official capital inflows to LDCs has grown substantially; the international money market has expanded dramatically; and capital controls have been liberalized in many economies. The need for analysis is greatest on two sets of questions. First, what factors have determined the size and direction of current account imbalances in recent years? Second, what has been the relation between the current account and movements in the exchange rate? Answers to the first question have tended to focus on OPEC price increases and surpluses. Observing that the large surpluses must be balanced in the aggre-This paper is part of a research project on the effects of OPEC price increases on macroeconomic adjustment in the world economy, in collaboration with Michael

Systems GMM estimates of the Feldstein–Horioka puzzle for the OECD countries and tests for structural breaks

“…From our paper's perspective studies that have made significant contributions to the literature on the OECD countries are Feldstein and Horioka (1980), Feldstein (1983), Sachs (1981, 1983, Caprio and Howard (1984), Penati and Dooley (1984), Feldstein and Bachetta (1991), Tesar (1991), Bodman (1995), Coakley et.al (1996Coakley et.al ( , 2003Coakley et.al ( and 2004, Ghosh (1995), Lemmen and Eijffinger (1995), Barkoulas et al (1996), Tsoulfidis (1997), Hussein (1998), Kim (2001), Blanchard and Giavazzi (2002), Amirkhalkhali et al (2003), Kasuga (2004), Giannone and Lenza (2004), Bahmani-Oskooee andChakrabarti (2005), Georgopoulos andHejazi (2005), Chakrabarti (2006), Katsimi and Moutos (2007), Di Iorio and Fachin (2007), Christopoulos (2007), Grier et.al (2008 and Fouquau et.al (2009 Tesar (1991Tesar ( ) 1960Tesar ( -1986Tesar ( 1960Tesar ( -1974Tesar ( 1975Tesar ( -1986 Giannone and Lenza (2004) 1970-19991970-19791980…”

External shocks, consumption-smoothing and capital mobility in India: evidence from an intertemporal optimization approach

“…The intertemporal approach to the CA originated with Sachs (1981Sachs ( , 1982 and was later extended by Obstfeld and Rogoff (1995) 4 . The approach is based on the permanent income hypothesis of Friedman (1957) and expectation theory of Hall (1978).…”

The Relationship of Terms of Trade and Economic Growth: The Turkish Case

“…Bu kanal üzerinde dıĢ ticaret hadlerinin dıĢ denge ve bu yolla tasarruflar üzerindeki etkisi analiz edilmiĢtir. Bu etkiler pozitif veya negatif olabilmektedir (Sachs 1981;Obstfeld 1982a;Gavin, vd. 1990;Ostry ve Reinhar 1992).…”