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A Quantitative Examination of Current Account Dynamics in Equilibrium Models of Barter Economies
Author: Mr. Enrique G. Mendoza
Series:
IMF Working Papers
Volume/Issue:
Volume 1992: Issue 014
Language:
English
Publication Date:
01 Feb 1992
DOI:
https://doi.org/10.5089/9781451924121.001
ISBN:
9781451924121
ISSN:
1018-5941
Pages:
38
Keywords:
WP; balance of trade; standard deviation; real interest rate; terms-of-trade shock; trade-balance behavior; countercyclical trade balance; detrended trade balance; terms-of-trade disturbance; cross-expenditure effect; Trade balance; Terms of trade; Consumption; Imports; Securities markets
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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 provides a numerical analysis of an intertemporal equilibrium model of a small open, barter economy that is subject to random shocks affecting endowments, the terms of trade, and the real interest rate. Equilibrium stochastic processes for macroeconomic aggregates are computed and their properties are compared with observed stylized facts. The model mimics the Harberger-Laursen-Metzler effect, but cannot account for a countercyclical trade balance, the variability of the real exchange rate, and the income elasticity of imports. The results also show that the correlation between the trade balance and the terms of trade, given incomplete insurance markets, is sensitive to changes in preference parameters and in the persistence of exogenous shocks.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund