IMF Working Papers

A Quantitative Examination of Current Account Dynamics in Equilibrium Models of Barter Economies

By Enrique G. Mendoza

February 1, 1992

Preview Citation

Format: Chicago

Enrique G. Mendoza A Quantitative Examination of Current Account Dynamics in Equilibrium Models of Barter Economies, (USA: International Monetary Fund, 1992) accessed September 26, 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 provides a numerical analysis of an intertemporal equilibrium model of a small open, barter economy that is subject to random shocks affecting endowments, the terms of trade, and the real interest rate. Equilibrium stochastic processes for macroeconomic aggregates are computed and their properties are compared with observed stylized facts. The model mimics the Harberger-Laursen-Metzler effect, but cannot account for a countercyclical trade balance, the variability of the real exchange rate, and the income elasticity of imports. The results also show that the correlation between the trade balance and the terms of trade, given incomplete insurance markets, is sensitive to changes in preference parameters and in the persistence of exogenous shocks.

Subject: Consumption, Financial markets, Imports, International trade, National accounts, Securities markets, Terms of trade, Trade balance

Keywords: Balance of trade, Consumption, Countercyclical trade balance, Cross-expenditure effect, Detrended trade balance, Imports, Real interest rate, Securities markets, Standard deviation, Terms of trade, Terms-of-trade disturbance, Terms-of-trade shock, Trade balance, Trade-balance behavior, WP

Publication Details

  • Pages:

    38

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1992/014

  • Stock No:

    WPIEA0141992

  • ISBN:

    9781451924121

  • ISSN:

    1018-5941

Notes

Also published in Staff Papers, Vol. 39, No. 4, December 1992.

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