1. Speed of adjustment of the current account: An international comparison.
- Author
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Goldberg, Lawrence G., Gosnell, Thomas F., and Okunev, John
- Subjects
BALANCE of payments ,ACCOUNTS ,FINANCE ,STOCHASTIC processes ,DEVELOPED countries - Abstract
A model of the current account using a mean-reverting Ornstein-Uhlenbeck process is developed and tested for three different measures of the current account. The results show very different adjustment patterns for the current accounts of seven large developed countries. This information can be very useful for further detailed analysis of behaviour within these individual countries. We find that with the exception of Canada and Japan all countries have a constant long-term mean which, in most cases, was not significantly different from zero The speed of adjustment to the mean was always between 0 and 1 France and Italy exhibited much more rapid adjustment patterns than did the other five countries. [ABSTRACT FROM AUTHOR]
- Published
- 1995
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