Current-dependent exchange-correlation potential for dynamical linear   response theory
  The frequency-dependent exchange-correlation potential, which appears in the usual Kohn-Sham formulation of a time-dependent linear response problem, is a strongly nonlocal functional of the density, so that a consistent local density approximation generally does not exist. This problem can be avoided by choosing the current-density as the basic variable in a generalized Kohn-Sham theory. This theory admits a local approximation which, for fixed frequency, is exact in the limit of slowly varying densities and perturbing potentials. 
G. Vignale and Walter Kohn