Explain Maurice Obstfeld's intertemporal current account theory.
My approach treats the current account as the outcome of forward-looking economic agents – households and governments – making saving and spending decisions over time. It's not simply about trade imbalances today, but how current decisions to borrow or lend reflect expectations about future income, consumption needs, and government policies. This allows us to analyze how factors like interest rates, fiscal policy, and productivity shocks influence current account dynamics over the long run.
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