caa a22 4500 605488940 CHVBK 20210128100457.0 cr unu---uuuuu 210128e20151201xx s 000 0 eng 10.1007/s10683-014-9422-z doi (NATIONALLICENCE)springer-10.1007/s10683-014-9422-z Balancing the current account: experimental evidence on underconsumption [Elektronische Daten] [Marcus Giamattei, Johann Lambsdorff] How should countries in a fixed exchange rate system balance their current account? This question was at the center of the historical debate between Keynes and White in 1944 and is being debated increasingly these days for the Eurozone. Should consolidation by deficit countries be complemented by higher spending in surplus countries in order to avoid a downward bias in the level of consumption? We investigate the associated disequilibrium behavior experimentally, letting our experimental subjects act as heads of state who repeatedly seek to coordinate their policies. If only deficits are punished, as proposed by White, we observe that consumption is persistently reduced and adjustment is slower than in a treatment in which a surplus is also punished, as suggested by Keynes. We find support for the fact that underconsumption occurs for behavioral but not for rational reasons. Economic Science Association, 2014 Beauty contest nationallicence Current account imbalance nationallicence White Plan nationallicence Keynes Plan nationallicence Deflationary bias nationallicence Level-k reasoning nationallicence Eurozone nationallicence Giamattei Marcus University of Passau, Innstrasse 27, 94032, Passau, Germany aut Lambsdorff Johann University of Passau, Innstrasse 27, 94032, Passau, Germany aut Experimental Economics Springer US; http://www.springer-ny.com 18/4(2015-12-01), 670-696 1386-4157 18:4<670 2015 18 10683 https://doi.org/10.1007/s10683-014-9422-z text/html Onlinezugriff via DOI BK010053 XK010053 XK010000 Metadata rights reserved Springer special CC-BY-NC licence nationallicence 1 research-article jats NATIONALLICENCE NATIONALLICENCE NL-springer NATIONALLICENCE 856 40 https://doi.org/10.1007/s10683-014-9422-z text/html Onlinezugriff via DOI NATIONALLICENCE 700 1- Giamattei Marcus University of Passau, Innstrasse 27, 94032, Passau, Germany aut NATIONALLICENCE 700 1- Lambsdorff Johann University of Passau, Innstrasse 27, 94032, Passau, Germany aut NATIONALLICENCE 773 0- Experimental Economics Springer US; http://www.springer-ny.com 18/4(2015-12-01), 670-696 1386-4157 18:4<670 2015 18 10683