Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/64033
Authors: 
Aizenman, Joshua
Year of Publication: 
2008
Series/Report no.: 
Working Papers, Santa Cruz Center for International Economics 08-15
Abstract: 
This paper studies the links between current accounts and relative price levels, finding that current account changes are associated with sizable future relative price levels effects. This is done in panel regressions of the Penn effect, adding a lagged current account/GDP and other explanatory variables. Higher GDP/capita and a greater export share of manufacturing tend to mitigate the real exchange rate impact of lagged current accounts. Active management of current accounts may provide a powerful adjustment channel, mitigating the real exchange rate effects of volatile terms of trade, and may explain the growing proliferation of Sovereign Wealth Funds.
Subjects: 
current account
relative price levels
real exchange rate
Sovereign Wealth Funds
JEL: 
F15
F21
F32
Document Type: 
Working Paper

Files in This Item:
File
Size
264.02 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.