Arbeitspapier

The US as the "demander of last resort" and its implications on China's current account

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This paper evaluates the degree to which current account patterns are explained by the variables suggested by the literature, and reflects on possible future patterns. We start with panel regressions explaining the current account of 69 countries during 1981-2006. We identify an asymmetric effect of the US as the 'demander of last resort': a 1% increase in the lagged US imports/GDP is associated with 0.3% increase of current account surpluses of countries running surpluses, but with insignificant changes of current account deficits of countries running deficits. Overall, the panel regressions account for not more than 4/5 of the variation. We apply the regression results to assess China's current account over the next six years, projecting a large drop in its account/GDP surpluses.

Language: Englisch

Bibliographic citation: Series: Working Paper ; No. 646

Classification: Wirtschaft
Economic Integration
Current Account Adjustment; Short-term Capital Movements

Subject: current account
demander of last resort
global balances
Zahlungsbilanzungleichgewicht
Prognose
Schätzung
Welt
China
USA

Event: Geistige Schöpfung

(who): Aizenman, Joshua
Jinjarak, Yothin

Event: Veröffentlichung

(who): University of California, Economics Department

(where): Santa Cruz, CA

(when): 2008

Handle: http://hdl.handle.net/10419/64531

Last update: 10.03.2025, 11:41 AM CET

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Object type

Arbeitspapier

Associated

Aizenman, Joshua
Jinjarak, Yothin
University of California, Economics Department

Time of origin

2008

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