The Current Account, Fiscal Policy and Medium Run Income Determination

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Title The Current Account, Fiscal Policy and Medium Run Income Determination
Author Makin, Anthony John
Journal Name Contemporary Economic Policy
Editor Darwin Hall
Year Published 2004
Place of publication Cary, North Carolina
Publisher Oxford University Press
Abstract This paper presents a new framework for analysing the simultaneous determination of current account imbalances and the path of national income. Using standard macroeconomic behavioral relationships, it first examines how and why current account deficits matter by investigating links between domestic consumption, government spending, output, saving, investment, interest rates and capital flows. Central to the model is the distinction between aggregate output and expenditure that enables dissection of the effects of discretionary fiscal policy on the current account and national income. The framework yields results relevant to the 'twin deficits' hypothesis that are contrary to those of standard models.
Peer Reviewed Yes
Published Yes
Publisher URI
Copyright Statement Copyright 2004 Blackwell Publishing. This is the author-manuscript version of the paper. Reproduced in accordance with the copyright policy of the publisher. The definitive version is available at
Volume 22
Issue Number 3
Page from 309
Page to 317
ISSN 1074-3529
Date Accessioned 2006-07-10
Language en_AU
Faculty Griffith Business School
Subject Macroeconomic Theory
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1x

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