A theory of current account and exchange rate determinations

Joshua Aizenman

doi:10.1016/0014-2921(83)90031-4

A theory of current account and exchange rate determinations

Joshua Aizenman

Research output: Contribution to journal › Article › peer-review

5 Scopus citations

Abstract

The purpose of this paper is to construct a two-period, two-country model that derives the current account, the exchange rate, the terms of trade, and real interest rates from optimal behavior principles. This is done by constructing a model that uses money mainly as a means of exchange, where the technology of exchange is flexible due to potential substitutability of time and real balances as a means of coordinating transactions. The discussion results in a framework that integrates elements of net saving theories and the monetary approach into a unified structure, in which the two approaches are complementary viewpoints.

Original language	English
Pages (from-to)	261-280
Number of pages	20
Journal	European Economic Review
Volume	23
Issue number	3
DOIs	https://doi.org/10.1016/0014-2921(83)90031-4
State	Published - 1 Jan 1983
Externally published	Yes

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/0014-2921(83)90031-4

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A theory of current account and exchange rate determinations

Abstract

ASJC Scopus subject areas

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