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Integration of current account imbalances in the OECD

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  • Narayan, Seema

Abstract

The Glick and Rogoff (1995) hypothesis suggests that common or global shocks do not influence current accounts of countries which are symmetric. This is tested for 37 pairs of current account imbalances out of 17 OECD countries. Using time series data that spans the pre-Global crisis period but including several sub-samples recognizing the advent of the Euro, this study shows that for nine pairs of countries common shocks do matter for current account imbalances. Results obtained from the Granger causality test do not support the presence of spillovers in some of these pairs. Therefore, this study documents some empirical evidence which departs from the Glick and Rogoff proposal.

Suggested Citation

  • Narayan, Seema, 2014. "Integration of current account imbalances in the OECD," Economic Modelling, Elsevier, vol. 38(C), pages 288-295.
  • Handle: RePEc:eee:ecmode:v:38:y:2014:i:c:p:288-295
    DOI: 10.1016/j.econmod.2014.01.019
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    More about this item

    Keywords

    Current account shocks; Correlation; Granger causality;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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