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Nominal shocks and the current account: A structural VAR analysis of 14 OECD countries

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Abstract

This paper provides some empirical evidence on one of the most controversial theoretical implications of the new open economy literature, which refers to the role of the current account in the international monetary transmission mechanism. In order to throw some light on this issue, two structural VAR models are estimated separately for 14 industrialized countries. The main empirical results highlight the importance of the role of nominal disturbances for current account fluctuations. Additionally, it is found that expansionary nominal shocks generate temporary current account surpluses, whose size is positively correlated with the openness of the individual countries. JEL no. C32, E40, F41, F42

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Authors and Affiliations

  1. University of Amsterdam, Roetersstraat 11, 1018 WB, Amsterdam

    Massimo Giuliodori

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  1. Massimo Giuliodori
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Correspondence to Massimo Giuliodori.

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Giuliodori, M. Nominal shocks and the current account: A structural VAR analysis of 14 OECD countries. Rev. World Econ. 140, 569–591 (2004). https://doi.org/10.1007/BF02659615

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