Malaysia’s current account deficits : an intertemporal optimization perspective.
The study examines the account imbalances in Malaysia during the past four decades. Using Sachs’s (National Bureau of Economic Research,Working Paper No. 859, 1982) intertemporal model, we address the issue of external solvency by measuring the deviation of actual from the optimal path of the curren...
| Main Authors: | , |
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| Format: | Article |
| Language: | English English |
| Published: |
Springer Verlag
2008
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| Online Access: | http://psasir.upm.edu.my/id/eprint/15524/ http://psasir.upm.edu.my/id/eprint/15524/1/Malaysia.pdf |
| _version_ | 1848842701734150144 |
|---|---|
| author | Ismail, Hamizun Baharumshah, Ahmad Zubaidi |
| author_facet | Ismail, Hamizun Baharumshah, Ahmad Zubaidi |
| author_sort | Ismail, Hamizun |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | The study examines the account imbalances in Malaysia during the past four decades. Using Sachs’s (National Bureau of Economic Research,Working Paper No. 859, 1982) intertemporal model, we address the issue of external solvency by measuring the deviation of actual from the optimal path of the current account balance. All in all, we found that the actual path moves reasonably close to the estimated consumption-smooth currents accounts, suggesting that the current account balances satisfy the external solvency condition. The major findings from the empirical application of the model revealed the following: (i) the deficits of the 1990s prior to 1997 financial crisis were sustainable; (ii) the evidence appears to suggest that the current account balance broadly follows the same pattern of the intertemporal model and hence suggests that capital ismobile; (iii) the large surpluses observed during the post-1997 period significantly deviate from the optimal path, implying that consumption is unsustainable and is expected to fall in the near future and; (iv) there is excessive volatility in international capital movements for consumption-smoothing purpose. |
| first_indexed | 2025-11-15T08:03:19Z |
| format | Article |
| id | upm-15524 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English English |
| last_indexed | 2025-11-15T08:03:19Z |
| publishDate | 2008 |
| publisher | Springer Verlag |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-155242015-10-01T02:26:47Z http://psasir.upm.edu.my/id/eprint/15524/ Malaysia’s current account deficits : an intertemporal optimization perspective. Ismail, Hamizun Baharumshah, Ahmad Zubaidi The study examines the account imbalances in Malaysia during the past four decades. Using Sachs’s (National Bureau of Economic Research,Working Paper No. 859, 1982) intertemporal model, we address the issue of external solvency by measuring the deviation of actual from the optimal path of the current account balance. All in all, we found that the actual path moves reasonably close to the estimated consumption-smooth currents accounts, suggesting that the current account balances satisfy the external solvency condition. The major findings from the empirical application of the model revealed the following: (i) the deficits of the 1990s prior to 1997 financial crisis were sustainable; (ii) the evidence appears to suggest that the current account balance broadly follows the same pattern of the intertemporal model and hence suggests that capital ismobile; (iii) the large surpluses observed during the post-1997 period significantly deviate from the optimal path, implying that consumption is unsustainable and is expected to fall in the near future and; (iv) there is excessive volatility in international capital movements for consumption-smoothing purpose. Springer Verlag 2008 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/15524/1/Malaysia.pdf Ismail, Hamizun and Baharumshah, Ahmad Zubaidi (2008) Malaysia’s current account deficits : an intertemporal optimization perspective. Empirical Economics, 35 (3). pp. 569-590. ISSN 0377-7332; ESSN: 1435-8921 10.1007/s00181-007-0179-5 English |
| spellingShingle | Ismail, Hamizun Baharumshah, Ahmad Zubaidi Malaysia’s current account deficits : an intertemporal optimization perspective. |
| title | Malaysia’s current account deficits : an intertemporal
optimization perspective. |
| title_full | Malaysia’s current account deficits : an intertemporal
optimization perspective. |
| title_fullStr | Malaysia’s current account deficits : an intertemporal
optimization perspective. |
| title_full_unstemmed | Malaysia’s current account deficits : an intertemporal
optimization perspective. |
| title_short | Malaysia’s current account deficits : an intertemporal
optimization perspective. |
| title_sort | malaysia’s current account deficits : an intertemporal
optimization perspective. |
| url | http://psasir.upm.edu.my/id/eprint/15524/ http://psasir.upm.edu.my/id/eprint/15524/ http://psasir.upm.edu.my/id/eprint/15524/1/Malaysia.pdf |