scholarly journals The Harberger-Laursen-Metzler Effect: Evidence from Pakistan

2012 ◽  
Vol 17 (2) ◽  
pp. 87-110 ◽  
Author(s):  
Tayyaba Idrees ◽  
Saira Tufail
Keyword(s):  
Time Series ◽  
Current Account ◽  
Vector Autoregression ◽  
Real Income ◽  
Terms Of Trade ◽  
Temporary Increase ◽  
Current Account Balance ◽  
Time Series Dataset ◽  
The Current Account

According to the Harberger-Laursen-Metzler (HLM) effect, an exogenous temporary increase in the terms of trade leads to an improvement in the current account balance. This paper uses a recursive vector autoregression to investigate empirically the existence of the HLM effect in Pakistan, using a time series dataset for the period 1980–2009. Two important results emerge. First, real income deteriorates with an improvement in the terms of trade. Second, the current account balance also responds negatively to innovations in the terms of trade, which implies that the HLM effect does not exist in Pakistan.

scholarly journals Ocena efektu Harbergera-Laursena-Metzlera w polskim sektorze rolno-żywnościowym

2019 ◽  
Vol 106 (1) ◽  
pp. 36-50
Author(s):  
Jacek Strojny
Keyword(s):  
Current Account ◽  
Vector Autoregression ◽  
Value Added ◽  
Terms Of Trade ◽  
The Other ◽  
Food Sector ◽  
Exogenous Factor ◽  
Trade Shocks ◽  
Gross Value Added ◽  
The Current Account

The aim of the study was to asses the Harberger-Laursen-Metzler effect in Polish agro-food sector. The analysis covers period of 2002-2017. There was applied the vector autoregression (VAR) methodology. The outcome of the research revealed that permanent deterioration in terms of trade contributed to the current account of Polish agribusiness sector improvement. The temporary effect of terms of trade shocks was not indentified. Additionally, the research enabled recognition of gross value added (GVA) as the most exogenous factor of the VAR system. On the other hand most endogenous factor of the model is the current account. The variable permanent terms of trade is more exogenous factor than the current account.

Does real exchange rate devaluation improve the current account balance of highly indebted low income countries?

2019 ◽  
Vol 10 (2) ◽  
pp. 212-225
Author(s):  
Getaneh Mihret Ayele
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Current Account ◽  
Low Income ◽  
Low Income Countries ◽  
Current Account Balance ◽  
Content Type ◽  
Long Run ◽  
The Current Account

Purpose The purpose of this paper is to examine whether real exchange rate devaluation improves the current account balance of four highly indebted low-income countries of East Africa. Design/methodology/approach The pooled mean group (PMG) approach is used for panel data from four countries over the period 1970–2016. The paper also applied bound testing and ARDL model for time-series data from individual sample countries. Findings The panel PMG/ARDL estimation result reveals that real exchange rate devaluation has no significant impact on the current account balance, both in the short and long run. However, the time-series analysis using the bound testing and restricted ARDL estimation suggests that real exchange rate devaluation improves the current account balance in the long run for only Ethiopia. The overall empirical results reveal that the current account balance would improve with the rising domestic income while it deteriorates with increasing foreign income and external indebtedness in the long run. Originality/value The paper is original.

scholarly journals The Harber-Laursen-Metzler effect in Poland

2012 ◽  
Vol 3 (1) ◽  
pp. 5-28
Author(s):  
Piotr Misztal
Keyword(s):  
Current Account ◽  
Vector Autoregression ◽  
Terms Of Trade ◽  
Vector Autoregression Model ◽  
Permanent Improvement ◽  
Autoregression Model ◽  
The Current Account

The aim of the paper is to analyse of the Harberger-Laursen-Metzler effect in light of the theory and in practice, with particular reference to this effect in Poland in the period 1995-2009. The results of research carried out by means of the vector autoregression model (VAR) revealed that temporary improvement in terms of trade in Poland led to the current account improvement, and permanent improvement in terms of trade contributed to the current account deterioration. Thus it was confirmed prevalence of the Harberger-Laursen-Metzler effect in Poland. Additionally, results of investigation confirmed relatively greater impact of temporary changes in terms of trade on the current account than in the case of permanent changes in terms of trade. Analogous interdependence was revealed witch reference to explanation of the current account variability. Temporary changes in terms of trade accounted for in much more degree the current account variability in relation to permanent changes in terms of trade.

What Explains Current Account Surplus in Korea?

2018 ◽  
Vol 17 (2) ◽  
pp. 70-93
Author(s):  
Chirok Han ◽  
Kwanho Shin
Keyword(s):  
Exchange Rate ◽  
Fiscal Policy ◽  
Current Account ◽  
Current Account Balance ◽  
Budget Deficits ◽  
Current Account Surplus ◽  
Short Run ◽  
The Right ◽  
The Impact ◽  
The Current Account

Since the currency crisis in 1998, Korea has experienced continuous current account surpluses. Recently, the current account surplus increased more rapidly—amounting to 7.7 percent of GDP in 2015. In this paper, we investigate the underlying reasons for the widening of Korea's current account surpluses. We find that the upward trend in Korea's current account surpluses is largely explained by its demographical changes. Other economic variables are only helpful when explaining short run fluctuations in current account balances. Moreover, we show that Korea's current account surplus is expected to disappear by 2042 as it becomes one of the most aged economies in the world. Demographic changes are so powerful that they explain, quite successfully, the current account balance trends of other economies with highly aged populations such as Japan, Germany, Italy, Finland, and Greece. When we add the real exchange rate as an additional explanatory variable, it is statistically significant with the right sign, but the magnitude explained by it is quite limited. For example, to reduce the current account surplus by 1 percentage point, a 12 percent depreciation is needed. If Korea's current exchange rate is undervalued 4 to 12 percent less than the level consistent with fundamentals, it is impossible to reduce Korea's current account surplus to a reasonable level by adjusting the exchange rate alone. Another way to reduce current account surplus is to expand fiscal policies. We find, however, that the impact of fiscal adjustments in reducing current account surplus is even more limited. According to our estimates, reducing the current account surplus by 1 percentage point requires an increase in budget deficits (as a ratio to GDP) of 5 to 6 percentage points. If we allow endogenous movements of exchange rate and fiscal policy, the impact of exchange rate adjustment increases by 1.6 times but that of fiscal policy decreases that it is no longer statistically significant.

scholarly journals Financial Liberalization and Current Account Developments in New EU Member States

2020 ◽  
Vol 23 (1) ◽  
pp. 141-154
Author(s):  
Zdenka Obuljen Zoričić ◽  
Boris Cota ◽  
Nataša Erjavec
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Positive Sign ◽  
Current Account Balance ◽  
Financial Openness ◽  
Member States ◽  
Eu Member States ◽  
New Eu Member States ◽  
The Eu ◽  
The Current Account

AbstractDue to negotiations on accession to the EU, the new EU member states from Central and Eastern Europe went through the financial opening. In the pre-crisis period followed by high liquidity in global markets, most of the EU new member states experienced rapid credit growth, which conditioned the appreciation of the exchange rate. External imbalances and vulnerabilities built up. Countries experienced deterioration in their current accounts. This paper investigates the link between financial openness, real effective exchange rate, financial crisis and current account balance within the Panel Auto-Regressive Distributed Lag (ARDL) framework for 11 new European Union members during the period from 1999 to 2016. The results obtained by the use of pooled mean group estimator (PMG) show that in the long run, financial openness has a significant negative impact on the current account balance. In the short run, crisis significantly influences the current account balance having a positive sign.

The long run influence of pension systems on the current account

2019 ◽  
Vol 20 (1) ◽  
pp. 67-101
Author(s):  
Thomas Davoine
Keyword(s):  
Current Account ◽  
Overlapping Generations ◽  
Current Account Balance ◽  
Current Account Surplus ◽  
Pension Systems ◽  
Long Run ◽  
Funded Pensions ◽  
Future Consumption ◽  
Cross Country ◽  
The Current Account

AbstractExplaining cross-country differences in current accounts is difficult. While pay-as-you-go pensions reduce the need to save for retirement, contributions to capital-funded pensions are saved for future consumption. An overlapping-generations analysis shows that capital-funded pensions increase net foreign assets holdings. With a multi-pillar system whose capital-funded part accounts for 18% of pensions, the Austrian current account balance would be 1 percentage point of gross domestic product (GDP) higher than with pure pay-as-you-go pensions in 20 years. By comparison, the Austrian current account surplus averages 1.8% of GDP. Empirically, I find that the current account of high-income countries increases with the coverage and replacement rates of capital-funded pensions.

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