During the past three decades, Japan s current account experienced five large swings. The yen appreciated considerably in periods when the current account boomed, and it depreciated whenever Japan s external performance weakened. However, there has always been a certain lag in the adjustment of...

The Target liabilities of the GIPS countries (Greece, Ireland, Portugal and Spain) amounted to314 billion euros in March 2011. They measure the additional central bank money that their corresponding National Central Banks (NCBs) have loaned in excess of the money needed to cover their domestic...

We use stochastic optimal control-dynamic programming (DP) to derive the optimal foreign debt/net worth, consumption/net worth, current account/net worth, and endogenous growth rate in an open economy. Unlike the literature that uses an Intertemporal Budget Constraint (IBC) or the Maximum...

In this paper we argue that supply-side adjustments (i.e. the reallocation of productive resources between the traded and non-traded sectors) can be an important determinant of the output costs of current account adjustment. The argument relies on the fact that tax evasion is more prevalent in...

Bilateral trade balances often play an important role in the international trade policy debate. Academic economists understand that they are misleading indicators of competitiveness and of the gains from trade. However, they also recognize their political relevance, calling for accurate...

Both global imbalances and financial market (de-)regulation feature prominently among the potential causes of the global financial crisis, but they have been largely discussed separately. In this paper, we take a different angle and investigate the relationship between financial market...

The paper analyses the role of fiscal and monetary policy for the development of the current account imbalances in the euro area, including the most recent developments during the coronavirus crisis. Several financial transmission channels such as international bank lending, changes in TARGET2...

Do the U.S. have a current account surplus or a deficit with the EU? Since 2009, official sources disagree: The U.S. Department of Commerce claims a consistent U.S. surplus while Eurostat reports the opposite. International transactions are notoriously difficult to measure accurately, but the...

We apply a "new" conventional (CAPB-based) measure of fiscal policy, which is less prone to endogeneity issues, and find that a 1-percent of GDP fiscal consolidation leads to the improvement of the current account-to-GDP ratio by approximately 0.8 percent of GDP, while previous research based on...