| Summary: | 碩士 === 國立暨南國際大學 === 經濟學系 === 90 === The main purpose of this paper is to explore the inverse relationship of the economic growth and the current account between the US and Japanese since 1980 to 1999 by utilizing the intertemporal model of the current account.
Traditional methodologies use a single-country VAR framework in testing the model, As to our knowledge, the more integrated world economy and trade partnership, the more easily a country’s current account is affected by those of the others and their macroeconomic policies as well.
This paper, therefore, tries to pool the US and Japanese data in Fully Modified（FM）VAR rather than performing conventional single-country VAR of the present-value model to explore this negative correlation.
The empirical findings suggest that after fully incorporating the information both at home and in the rest of world, the joint estimation does provide a statistically more appropriate prediction of the dynamic behavior of the US current account than the usual single-country approach. However, for the case of Japanese current account, the joint estimation does not make any improvement to the poor prediction of actual current account in the single-country estimation. Maybe it is because of the inadequacy of modeling present-value theory for the Japanese economy. As for the case of Japanese current account, the joint estimation does not make any improvement to the poor prediction of actual current account in the single-country estimation. It may because of the inadequacy of modeling present-value theory for the Japanese economy.
The methodology of joint VAR estimation developed in this paper does improve the fitness of empirical forecasts of current account on the consumption-smoothing component of current account relative to the use of single-country approach which lacks a full incorporation of all information available to the rational agents.
The simple present-value model of this two-country world framework and its procedural econometric treatments can then be easily and plausibly extended to an N-country version of the present-value model, when examining closely related countries, e.g., the G7 countries, Euro region economies, the OECD countries, …etc.
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