• 1 Introduction
  • 2 A Two-Country General Equilibrium Model
  • 2.1 Production and Investment
  • 2.2 Two Assets
  • 2.3 Consumption and Portfolio Choice
  • 2.4 Solution Method
  • 3 Current Account Response to Temporary IncomeShocks
  • 3.1 Dynamic Response of the Economy
  • 3.2 Why Does the New Rule Not Hold?
  • 3.3 Intertemporal versus Portfolio Theory of the CurrentAccount
  • 4 What Accounts for the Cross-Section Evidenceby Kraay and Ventura?
  • 5 Are There Di¤erent Models Where the NewRule Does Hold?
  • 6 Conclusion
  • Appendix
  • References