Abstract
The report analyzes the relation between private consumption and the current account, regarding it as the external savings of economy. The study is carried out through of an inter-temporal current account model, which is derived from the Permanent Income Theory. This approach, according to the permanent income model with inter-temporal smoothing of consumption allows us to know whether the current account of the balance of payment in the Ecuadorian economy either behaves optimally or is away from the equilibrium level. It was found out that observed consumption differed greatly during 1970-1992 approximately, but in the liberalization period of economy, the observed consumption is bigger than the optimal consumption component and there is a tendency towards convergence.
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