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The Current Account in Perspective: Lessons from the Italian Experience
Author:
International Monetary Fund
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Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 037
Language:
English
Publication Date:
01 Jan 1990
DOI:
https://doi.org/10.5089/9781451977752.001
ISBN:
9781451977752
ISSN:
1018-5941
Pages:
38
Keywords:
WP; deficit; saving; saving-investment approach; saving-investment framework; persistent current account deficit; saving-investment correlation; approach to the current account; investment balance; widening deficit; balance of payments crisis; capital account deficit; government saving; private sector investment; Italy's current account; Current account; Current account deficits; Capital account; Capital flows; International reserves
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper draws some lessons about policies toward the current account from Italy’s balance of payments history between 1960 and 1988. The key role of speculative capital flows during every major episode of external imbalance brings out the limitations of exchange rate rules that focus exclusively on the current account. Simple saving-investment rules would also have failed to avert Italy’s balance of payments crises. These arose in the context of widening current deficits due to a rising investment ratio and/or a widening private imbalance, which should have been self-correcting according to the commonly proposed saving-investment rules.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund