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This paper explores the long-run current account to GDP ratio in the present value model framework (PVMCA). Firstly, we use Euler equation at macro level to identify a general equation of the per capita current account to GDP. Secondly, through the overlapping generations model we determine the equation of per-capita CA using relevant variables, and discuss the empirical validity of the PVMCA via the quasi-elasticity of CA-to-GDP with respect to the per capita growth rate of output and consumption. We show that the elasticities of CA-to-GDP to per-capita output and ant to per-capita consumption growths interact in opposite paths, meaning that a higher growth rate of consumption tomorrow involves more saving yesterday and brings up a positive current account balance.Keywords. Current account, Consumption, Intertemporal Model, Per-capita GDP, Quasi-elasticity.JEL. E10, E20, F40.

It is well known in standard economic literature that nominal frictions have significant impact on the transmission mechanism of monetary policy. This paper considers a closed economy version of DSGE model with various nominal frictions vis-à-vis monetary-cumfiscal blocks to seek the basic query that how monetary policy impacts while in the presence of nominal frictions, like price stickiness, staggered wages, etc. Using Bayesian Simulation techniques, we estimate the model for the closed economy. Our simulation results show that despite the apparent similarities of various frictions, their responses to shocks and fit to data are quite different and there is no agreement on their relative performance. As a result, Monetary Authorities cannot afford to rely on a single reference model which contains few nominal frictions of the economy but need to model a large number of alternative ways available when they take their decision of optimal monetary policy. JEL classification: E32, E37 Keywords: DSGE Models, Nominal Trictions, Monetary Policy