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Current Accounts: What Is Their Relevance for Economic Policymaking?
Author:
Mr. Fabio Scacciavillani
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Mr. Malcolm D. Knight null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1998: Issue 071
Language:
English
Publication Date:
01 May 1998
DOI:
https://doi.org/10.5089/9781451849219.001
ISBN:
9781451849219
ISSN:
1018-5941
Pages:
41
Keywords:
WP; exchange rate; balance of payments; fiscal policy; Current account; current account sustainability; Italy; Israel; Pakistan; current account position; savings-investment gap; foreign currency; utility function; cost of capital; excess demand; price level; international economics; current account misalignment; Current account balance; Current account deficits; Real exchange rates; Exchange rates; Eastern Europe; 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 surveys the main theoretical approaches for analyzing movements in the current account of the balance of payments, from the Mundell-Fleming paradigm to modern intertemporal approaches. It discusses the main implications of these analyses for policymaking, highlighting that modern economic theory views current account imbalances not simply as a reflection of goods market developments, but also as an outcome of intertemporal consumption and investment choices and associated capital market behavior. To reflect on the policy strategies applied under diverse circumstances, the paper analyzes the recent experiences of Italy, Israel, and Pakistan.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund