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Will the Asian countries buy up the United States?: Current account imbalances and the Uncovered Interest Rate Parity: Japan, China and the U.S. 1970-2008
Jönköping University, Jönköping International Business School, JIBS, Economics.
2012 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This paper aims to explain the current account imbalances between the United States of America, Japan and China. According to theory, such imbalances should offset each other so that the international balance of payments account is zero. The study also tests the Uncovered Interest Rate Parity (UIP) theory for the same sample of countries. The focus is on the empirics of the topic, therefore time-series analysis is used. The results suggest that American current account deficit can indeed be explained by the surpluses of the Japanese and Chinese current accounts. Furthermore, the conclusion regarding the UIP is that it simply does not hold in the real world. Finally, the main implication of this study is that the Asian countries will eventually buy up American assets if the trend of imbalances continues.

Place, publisher, year, edition, pages
2012.
Keyword [en]
current account, Mundell-Flemming model, uncovered interest rate parity, financial account
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:hj:diva-18470OAI: oai:DiVA.org:hj-18470DiVA: diva2:533999
Subject / course
IHH, Economics
Uppsok
Social and Behavioural Science, Law
Supervisors
Examiners
Available from: 2012-08-15 Created: 2012-06-15 Last updated: 2012-08-15Bibliographically approved

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fulltext(870 kB)253 downloads
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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf