Current Accounts and Exchange Rates: A New Look at the Evidence / Greg Leonard, Alan C. Stockman.

Format:

Book

Author/Creator:

Leonard, Greg.

Contributor:

National Bureau of Economic Research.

Stockman, Alan C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8361.

NBER working paper series no. w8361

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Current Accounts and Exchange Rates

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

This paper 'goes back to basics' in empirical analysis of the J-Curve. First, we document strong violations in the distributional assumptions that underlie nearly all previous work on this issue. Second, we employ distribution-free, non-parametric statistical tests to characterize the data and summarize the key relationships between real exchange rates, the current account, and real GDP. We find some (weak) evidence of a J-Curve in the data. Interestingly, however, we document that this evidence is not consistent with the standard theoretical explanation of the J-Curve. Consequently, our empirical results pose a strong challenge for international economic theory.

Notes:

Print version record

July 2001.