TY  - JOUR
AU  - Choi,Horag
AU  - Mark,Nelson C.
AU  - Sul,Donggyu
TI  - Endogenous Discounting, the World Saving Glut and the U.S. Current Account
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13571
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13571
L1  - http://www.nber.org/papers/w13571.pdf
N1  - Author contact info:
Horag Choi
Department of Economics
Monash University
900 Dandenong Road
Caulfield East, VIC 3145
Australia
Tel: +61-3-9903-2848
Fax: +61-3-9903-1128
E-Mail: horag.choi@buseco.monash.edu

Nelson Mark
Department of Economics
University of Notre Dame
434 Flanner
Notre Dame, IN  46556
Tel: 574/631-0518
Fax: 574/631-4783
E-Mail: nmark@nd.edu

Donggyu Sul
University of Texas at Dallas
E-Mail: d.sul@utdallas.edu
AB  - We study the evolution of the U.S. current account in a two-country dynamic stochastic endowment model in which a single non-state contingent bond is the only internationally traded asset. The paper focuses on the world `saving glut' as the primary cause of continual deterioration in the current account and departs from the standard framework by introducing a three-parameter model of the subjective discount factor that depends on societal (per capita) variables that are external to household choices. When agents in the model are presented with U.S. and rest-of-world endowment data as the realization of the exogenous state vector, endogenously driven short-run international differences in subjective discounting that display increasing relative U.S. impatience create saving and current account imbalances that matches patterns observed in the data.
ER  -