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Meaningful Measures of the Current Account
Author(s) -
Fisher Eric O’N.,
Woo YoungSoo
Publication year - 1997
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00069
Subject(s) - net foreign assets , current account , economics , measure (data warehouse) , cash flow , benchmark (surveying) , meaning (existential) , current asset , current (fluid) , econometrics , cash , aggregate (composite) , net (polyhedron) , macroeconomics , financial economics , accounting , computer science , mathematics , market liquidity , electrical engineering , psychotherapist , geography , materials science , composite material , psychology , geodesy , engineering , database , exchange rate , geometry
Since the conventional current account uses cash‐flow accounting, it is potentially devoid of economic meaning. Assessing foreign assets at market values and including expected transfers from abroad, this paper reports two measures of the external surplus that are grounded in economic theory. The first measure is the aggregate generational current account, annual differences in the sum of net foreign assets across all current and future generations. The second measure is the generational profile of net foreign assets in a benchmark year. These ideas are implemented with data from Korea.