The Intertemporal Approach to the Current Account: Evidence for Chile

Authors

Keywords:

current account, intertemporal approach, present value test, capital controls, Chile

Abstract

This paper studies the existence of "excess" current-account imbalances in Chile in the 1960-1999 period. This phenomenon is modelled using present value tests that allow for variable interest rates and exchange rate fluctuations. Despite its simplicity, most of the observed imbalances in the current account are accounted for by the model. Results suggest that using models where agents behave as forward-looking rational agents, is a valid framework. Moreover, the analysis highlights the rel-evance of variable interest rates and exchange rates. Results also imply that capital controls, that were widely used in the period under study, were not effective.

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References

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Published

2002-10-31

How to Cite

Salas Landeau, S. A. (2002). The Intertemporal Approach to the Current Account: Evidence for Chile. Economic Analysis Review, 17(2), 95–121. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/20

Issue

Vol. 17 No. 2 (2002)

Section

Articles

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Copyright (c) 2002 Sergio A. Salas Landeau

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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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