A1 Journal article (refereed)
Cross-country variation in patience, persistent current account imbalances and the external wealth of nations (2022)

Nieminen, M. (2022). Cross-country variation in patience, persistent current account imbalances and the external wealth of nations. Journal of International Money and Finance, 121, Article 102517. https://doi.org/10.1016/j.jimonfin.2021.102517

JYU authors or editors

Publication details

All authors or editors: Nieminen, Mika

Journal or series: Journal of International Money and Finance

ISSN: 0261-5606

eISSN: 1873-0639

Publication year: 2022

Volume: 121

Article number: 102517

Publisher: Elsevier BV

Publication country: United Kingdom

Publication language: English

DOI: https://doi.org/10.1016/j.jimonfin.2021.102517

Publication open access: Openly available

Publication channel open access: Partially open access channel

Publication is parallel published (JYX): https://jyx.jyu.fi/handle/123456789/78703

Abstract

This paper is the first to utilize large-scale international surveys on economic preferences to examine the long-run relationships between patience, current accounts and external wealth. We find robust empirical evidence that countries with more patient individuals tend to run persistent current account surpluses, which in turn result in the accumulation of foreign assets. This theoretically plausible but empirically unexplored relationship holds true for euro area current account imbalances, global current account imbalances and net foreign asset positions worldwide. While the existing current account literature concentrates on proximate macroeconomic determinants, this paper’s extension of inferences from deep determinants (i.e., time preferences) to the distribution of external wealth of nations (i.e., net foreign asset positions) makes a unique contribution to the literature. Our finding showing that deep heterogeneities contribute to external imbalances suggests that the pattern of current account imbalances as well as the distribution of external wealth of nations might be very persistent.

Keywords: behavioural economics; traits of character; personal finance; national economy; wealth; international comparison

Free keywords: external wealth; current account; external imbalances; patience; economic preferences

Contributing organizations

Ministry reporting: Yes

Reporting Year: 2022

Preliminary JUFO rating: 1