Durdu, Ceyhun Bora; Mendoza, Enrique G.; Terrones, Marco E. - Federal Reserve Board (Board of Governors of the … - 2009
Theory predicts that a nation's stochastic intertemporal budget constraint is satisfied if net foreign assets (NFA) are integrated of any finite order, or if net exports (NX) and NFA satisfy an error-correction specification with a residual integrated of any finite order. We test these...