Arbeitspapier
An assessment of current account imbalance
The seriousness of an external imbalance should be assessed with respect its macroeconomic connections and intertemporal nature. A current account deficit reflects differences in time of saving and investment decicions of the economic agents - the households, the companies and the publie sector - as well as the international dimensions of these decisions, made possible by liberalized capital markets. In principle, respect for intertemporal budget constraints, which bind economic units, will keep foreign indebtedness on an equilibrium path and ensure the solvency of the economy in the long term. Distor~ions relating to the functioning' of markets may, however, lead to sub-optimal consumption and investment decisions and disequilibrium. The rate of growth of foreign indebtedness should be kept within the'limits set by the solvency constraint of the economy, which depends on the real rate of interest on the foreign debt and on the growth rate of the economy.
- ISBN
-
951-686-226-8
- Language
-
Englisch
- Bibliographic citation
-
Series: Bank of Finland Discussion Papers ; No. 36/1989
- Classification
-
Wirtschaft
- Event
-
Geistige Schöpfung
- (who)
-
Peura, Tapio
- Event
-
Veröffentlichung
- (who)
-
Bank of Finland
- (where)
-
Helsinki
- (when)
-
1989
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Peura, Tapio
- Bank of Finland
Time of origin
- 1989
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Väestön vanheneminen, työmarkkinat ja julkisen talouden näkymät
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Why is equity capital expensive for opaque banks?
Banks' equity stakes in borrowing firms: A corporate finance approach
Työn tuottavuuden kasvu toimialojen kokemusten valossa
Adjustment of the US current account deficit
Housing market and current account imbalances in the international economy
Saving, investment and the current account: A review of recent evidence
Current income and private consumption: Saving decisions: Testing the finite horizon model
An assessment of alternative lender of last resort schemes
Forecasting the macroeconomy with current financial market information: Europe and the United States
Enhancing bank transparency: A re-assessment
Väestön vanheneminen, työmarkkinat ja julkisen talouden näkymät
Central bank independence and wage bargaining structure: Empirical evidence
Why is equity capital expensive for opaque banks?
Banks' equity stakes in borrowing firms: A corporate finance approach