Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212067 
Year of Publication: 
2007
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 9/2007
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We present a two country DGE model and estimate it using Bayesian techniques and euro area and US quarterly data for 1977 2004. In analysing the current accounts we find that a lower US rate of time preference or a higher dollar risk premium could render the deficit sustainable, but that these could push the interest rate to the zero bound. Secondly, we find that fiscal policy is not sufficiently effective to improve the current account although the zero bound is not hit.
Subjects: 
current account
zero bound
policy coordination
JEL: 
E61
F32
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-367-4
Document Type: 
Working Paper

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