Are There Thresholds of Current Account Adjustment in the G7?

The authors would like to thank Bob Cumby, Bruce Hansen, Martin Feldstein and participants at the July 2004 NBER pre-conference for helpful suggestions, and to thank Mike Vaknin for superb research assistance. Special thanks to Rosemary Marcuss of the Bureau of Economic Analysis for agreeing to compile and make available revised estimates of exchange rate revaluation of the US foreign asset position. Richard Clarida is the C. Lowell Harriss Professor of Economics at Columbia University and a research associate of the NBER. Manuela Goretti is a PhD candidate at the University of Warwick. Mark Taylor is Professor of Macroeconomics at the University of Warwick and a research fellow of the CEPR.