Citation

Discussion Paper Details

Please find the details for DP9990 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Merchanting and Current Account Balances

Author(s): Elisabeth Beusch, Barbara Döbeli, Andreas M Fischer and Pinar Yesin

Publication Date: May 2014

Keyword(s): current account adjustment, industry dynamics and Merchanting

Programme Area(s): International Macroeconomics

Abstract: Merchanting is goods trade that does not cross the border of the firm's country of residence. Merchanting grew strongly in the last decade in several European economies and has become an important determinant of these countries' current account. Because merchanting firms reinvest their earnings abroad to expand their international activities, this practice raises national savings in the home country without increasing domestic investment. This results in a larger current account surplus. To show the empirical links between merchanting and the current account balance, two exercises are performed in this paper using a sample of 53 countries during 1980-2011. The first exercise estimates the savings impact of merchanting countries in empirical models of the medium-term current account. The second exercise shows that merchanting's impact on the country's current account is sensitive to firm mobility.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9990

Bibliographic Reference

Beusch, E, Döbeli, B, Fischer, A and Yesin, P. 2014. 'Merchanting and Current Account Balances'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9990