TY  - JOUR
AU  - Aizenman,Joshua
AU  - Jinjarak,Yothin
TI  - The US as the "Demander of Last Resort" and its Implications on China's Current Account
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14453
PY  - 2008
Y2  - October 2008
UR  - http://www.nber.org/papers/w14453
L1  - http://www.nber.org/papers/w14453.pdf
N1  - Author contact info:
Joshua Aizenman
Department of Economics;  E2
1156 High St.
University of California, Santa Cruz
Santa Cruz, CA  95064
Tel: 831/459-4791
Fax: 831/459-5077
E-Mail: jaizen@ucsc.edu

Yothin Jinjarak
University of London
College Buildings, 534
London
UK, WC1H 0XG
E-Mail: yothin.jinjarak@gmail.com
AB  - This paper evaluates the degree to which current account patterns are explained by the variables suggested by the literature, and reflects on possible future patterns. We start with panel regressions explaining the current account of 69 countries during 1981-2006. We identify an asymmetric effect of the US as the "demander of last resort:" a 1% increase in the lagged US current account deficit is associated with 0.5% increase of current account surpluses of countries running surpluses, but with insignificant changes of current account deficits of countries running deficits. Overall, the panel regressions account for not more than 2/3 of the variation. We apply the regression results to assess China's current account over the next six years, projecting a large drop in its account/GDP surpluses.
ER  -