The Federal Reserve Board eagle logo links to home page

International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page Investment and the Current Account in the Short Run and the Long Run
James M. Nason and John H. Rogers
1999-647  (October 1999)

Abstract:  Theoretical models of the relationship between investment and the current account impose restrictions on the joint dynamic behavior of these variables. These restrictions come in two forms. One imposes causal orderings on investment and the current account. The other restriction concerns the permanent responses of these variables to different shocks. We use these restrictions to identify empirically structural shocks from vector autoregressions of investment and the current account for Canada. Under certain identifications, our results support the implications of the intertemporal, small open economy model. However, these results are sensitive to perturbations of the identifications.

Full paper (1256 KB PDF)

Small Open Economy, Intertemporal Model, Identification

PDF files: Adobe Acrobat Reader   ZIP files: PKWARE

Home | IFDPs | List of 1999 IFDPs
To comment on this site, please fill out our feedback form.
Last update: July 19, 2001