IMF Working Papers

The Role of Stock Markets in Current Account Dynamics: Evidence from the United States

By Benoît Mercereau

May 1, 2003

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Benoît Mercereau. The Role of Stock Markets in Current Account Dynamics: Evidence from the United States, (USA: International Monetary Fund, 2003) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper tests a model of the role of stock markets in current account dynamics, developed in a companion paper. With U.S. data, the model performs better than the same model without stock markets. An insight given by the model is that the current account might help predict future stock market performance. This property receives some preliminary empirical confirmation. The results also suggest that stock markets matter to the current account dynamics.

Subject: Balance of payments, Consumption, Current account, Financial institutions, Financial markets, Futures markets, National accounts, Stock markets, Stocks

Keywords: Consumption, Consumption literature, Current account, Current account data, Current account development, Current account dynamics, Current account granger, Equation of the current account, Forecasting, Fundamental equation, Futures markets, Global, Net income, Savings choice, Stock markets, Stocks, U.S. data, WP

Publication Details

  • Pages:

    35

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2003/108

  • Stock No:

    WPIEA1082003

  • ISBN:

    9781451853124

  • ISSN:

    1018-5941

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