8. The business cycle and the current account. In the simplest static Keynesian models of undergraduate macroeconomics texts, higher current income Y may be associated with a current account deficit as imports mY rise. Thus the current account can be countercyclical. In actual industrial-country data, current accounts do tend to be countercyclical (see, for example, Baxter 1995). Early critics of the intertemporal approach to the current account (e.g., models such as those in this chapter) argued that a major empirical flaw of the approach is its inability to yield countercyclical current accounts. Are they right?