Revisiting the Glick–Rogoff Current Account Model: An Application to the Current Accounts of BRICS Countries

Yushi Yoshida*, Weiyang Zhai

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

2 Scopus citations

Abstract

Understanding what drives the changes in current accounts is one of the most important macroeconomic issues for developing countries. Excessive surpluses in current accounts can trigger trade wars, and excessive deficits in current accounts can, on the other hand, induce currency crises. The Glick–Rogoff (1995, Journal of Monetary Economics) model, which emphasizes productivity shocks at home and in the world, fit well with developed economies in the 1970s and 1980s. However, the Glick–Rogoff model fits poorly when it is applied to fast-growing BRICS countries for the period including the global financial crisis. We conclude that different mechanisms of current accounts work for developed and developing countries.

Original languageEnglish
Title of host publicationDynamic Modeling and Econometrics in Economics and Finance
PublisherSpringer Science and Business Media Deutschland GmbH
Pages265-291
Number of pages27
DOIs
StatePublished - 2021

Publication series

NameDynamic Modeling and Econometrics in Economics and Finance
Volume27
ISSN (Print)1566-0419
ISSN (Electronic)2363-8370

Keywords

  • BRICS countries
  • Current accounts
  • Glick–Rogoff model
  • Global financial crisis
  • Productivity shock

ASJC Scopus subject areas

  • General Economics, Econometrics and Finance

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