TY - JOUR
T1 - Determinants of external imbalances
T2 - The role of taxes, government spending, and productivity
AU - Leiderman, Leonardo
AU - Razin, Assaf
N1 - Funding Information:
* This work was supported by the Israeli International Institute for Applied Economic Policy Review. For useful comments, we thank an anonymous referee of this journal as well as participants in the NBER-TCER-CEPR Conference on Fiscal Policies in Open Macro Economies and in particular our discussants A. Tsuneki and K. Ariga. We are grateful to Zvi Sussman for providing many stimulating insights throughout the course of this project. Thanks are also due to Elhanan Helpman, Zvi Hercowitz, Larry Kotlikoff, Leora (Rubin) Meridor, and the participants of seminars at Duke University, IMF, International Macro Seminar of Paris, NBER, New York University, and Tel-Aviv University for helpful suggestions. Partial financial assistance from the Foerder Institute for Economic Research is gratefully acknowledged.
PY - 1991/12
Y1 - 1991/12
N2 - This paper develops and estimates a dynamic optimizing model of the current account. The model focuses on real factors that determine the evolution of saving and investment and hence the external balance. Three types of shocks are at the center of the analysis: productivity shocks, shocks to labor input, and tax policy shocks. While our approach is in line with the real business cycle models of the current account, the distinguishing feature of the work is the application of econometric methods to time series data for a small open economy so as to directly estimate the parameters governing saving and investment under rational expectations restrictions.
AB - This paper develops and estimates a dynamic optimizing model of the current account. The model focuses on real factors that determine the evolution of saving and investment and hence the external balance. Three types of shocks are at the center of the analysis: productivity shocks, shocks to labor input, and tax policy shocks. While our approach is in line with the real business cycle models of the current account, the distinguishing feature of the work is the application of econometric methods to time series data for a small open economy so as to directly estimate the parameters governing saving and investment under rational expectations restrictions.
UR - http://www.scopus.com/inward/record.url?scp=0039885877&partnerID=8YFLogxK
U2 - 10.1016/0889-1583(91)90007-D
DO - 10.1016/0889-1583(91)90007-D
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AN - SCOPUS:0039885877
SN - 0889-1583
VL - 5
SP - 421
EP - 450
JO - Journal of the Japanese and International Economies
JF - Journal of the Japanese and International Economies
IS - 4
ER -