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Long-Term Trends in the Saving-Investment Balance and Persistent Current Account Surpluses in a Small Open Economy: The Case of the Netherlands
Author:
Mr. Ioannis Halikias
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Series:
IMF Working Papers
Volume/Issue:
Volume 1996: Issue 042
Language:
English
Publication Date:
01 May 1996
DOI:
https://doi.org/10.5089/9781451975772.001
ISBN:
9781451975772
ISSN:
1018-5941
Pages:
38
Keywords:
WP; investment-saving ratio; perfect competition; saving rate; saving-investment balance; Netherlands saving; saving-investment ratio; persistent current; Current account surpluses; Current account; Real wages; Total factor productivity; Global
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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 explores, from an investment-saving perspective, the factors underlying the persistent widening of the current account surplus in the Netherlands since the early 1980s. Standard intertemporal models, even appropriately extended to incorporate specific features of the Dutch economy, do not appear to fully account for this development. Accordingly, the paper focusses attention on the production side of the economy to gain further insight into the trends of the current account. Empirical evidence suggests that changes in relative factor prices and a relative demand shift toward non-tradable goods account for the bulk of the observed widening of the current account surplus. In turn, the impact of these factors on the current account appears to reflect both changes in factor proportions and deviations from perfect competition in the Dutch sheltered sector.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund