Abstract
This paper examines the joint determination of international debt and capital accumulation in a two-country model. National rates of time preference are endogenous, adjusting along an optimal path to come into equality with one another in the steady state. The characteristics of short-run current account dynamics are crucially linked to world capital accumulation and to a country's long-run net external asset position. Steady-state creditor countries tend to have current account surpluses during episodes of world output growth and vice versa for debtor countries. This gives rise to possible non-monotonic adjustment in the current account and consumption.
Original language | English (US) |
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Pages (from-to) | 1-25 |
Number of pages | 25 |
Journal | Journal of International Economics |
Volume | 30 |
Issue number | 1-2 |
DOIs | |
State | Published - Feb 1991 |
All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics