Research data from Seoul National University update understanding of banking and finance
2009 NOV 23 - (VerticalNews.com) -- "Many intertemporal open economy macro models imply a theory of consumption smoothing channels; thus we build an empirical model to analyze the intertemporal smoothing role of saving components (fixed investments, inventories and trade balance) through the use of VAR impulse responses to different types of shocks. We find that for the OECD countries the bulk of intertemporal smoothing has been carried out domestically, via gross fixed investments and inventories, but the trade balance has also played a relevant - albeit volatile - smoothing role," researchers in Seoul, South Korea report.
"We also characterize the dynamic behavior of each component: the trade balance and inventories are mostly used as short-run smoothing tools while fixed investment provides more and more smoothing over time. We can also address some empirical puzzles, such as the ''excess sensitivity of investment'' anomaly (Glick, R., Rogoff, K., 1995. Global versus country-specific productivity shocks and the current account. Journal of Monetary Economics, 35, 159-192) and the ''saving-investment correlation puzzle'' (Feldstein, M., Horioka, C., 1980. Domestic saving and international capital flows," wrote P. Asdrubali and colleagues, Seoul National University.
The researchers concluded: "Economic journal, 90, 314-329)."
Asdrubali and colleagues published their study in the Journal of Banking & Finance (Consumption smoothing channels in open economies. Journal of Banking & Finance, 2009;33(12):2293-2300).
For additional information, contact S. Kim, Seoul National University, Dept. of Economics, San 56-1, Seoul 151746, South Korea.
Publisher contact information for the Journal of Banking & Finance is: Elsevier Science BV, PO Box 211, 1000 AE Amsterdam, Netherlands.
Keywords: City:Seoul, Country:South Korea, Life Sciences, Behavior, Banking and Finance, Seoul National University.
This article was prepared by VerticalNews Internet editors from staff and other reports. Copyright 2009, VerticalNews Internet via VerticalNews.com.