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Current-Account Reversals in Developing Countries: The Role of Fundamentals

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  • Alberto Bagnai

    ()

  • Stefano Manzocchi

    ()

Abstract

This paper studies episodes of current-account reversal in developing countries (DCs) in the period 1965–1994. First, a number of persistent shifts (“reversalsâ€) in the current-account balance dynamics are identified by structural break and segmented trend tests; then, the relationship between these reversals and a set of fundamentals suggested by the intertemporal approach to the current account is investigated in a panel-data set-up. We find that fundamentals play a different role in episodes of persistent deterioration or improvement of the current-account balance in DCs. Copyright Kluwer Academic Publishers 1999

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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 10 (1999)
Issue (Month): 2 (May)
Pages: 143-163

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Handle: RePEc:kap:openec:v:10:y:1999:i:2:p:143-163

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Web page: http://www.springerlink.com/link.asp?id=100323

Related research

Keywords: current account dynamics; developing countries; unit roots; structural breaks; panel data;

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Cited by:
  1. Hutchison, Michael M. & Noy, Ilan, 2004. "Sudden Stops and the Mexican Wave: Currency Crises, Capital Flow Reversals and Output Loss in Emerging Markets," Santa Cruz Department of Economics, Working Paper Series qt38j2b036, Department of Economics, UC Santa Cruz.
  2. Christian Aßmann & Jens Boysen-Hogrefe, 2010. "Analysis of current account reversals via regime switching models," Economic Change and Restructuring, Springer, vol. 43(1), pages 21-43, February.
  3. Alberto Bagnai, 2013. "Unhappy families are all alike: Minskyan cycles, Kaldorian growth, and the Eurozone peripheral crises," a/ Working Papers Series 1301, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
  4. Yusuf Ekrem Akbas & Mehmet Senturk & Canan Sancar, 2013. "Testing for Causality between the Foreign Direct Investment, Current Account Deficit, GDP and Total Credit: Evidence from G7," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(6), pages 791-812, December.
  5. Fernando Perez de Gracia & Juncal Cuñado, 2001. "Intertemporal Current Account And Productivity Shocks: Evidence For Some European Countries," Working Papers 01-05, Asociación Española de Economía y Finanzas Internacionales.
  6. Bernardina Algieri & Thierry Bracke, 2007. "Patterns of Current Account Adjustment – Insights from Past Experience," CESifo Working Paper Series 2029, CESifo Group Munich.
  7. Luiz de Mello & Pier Carlo Padoan & Linda Rousová, 2010. "Are Global Imbalances Sustainable?: Shedding Further Light on the Causes of Current Account Reversals," OECD Economics Department Working Papers 813, OECD Publishing.
  8. Aßmann, Christian, 2007. "Determinants and Costs of Current Account Reversals under Heterogeneity and Serial Correlation," Economics Working Papers 2007,17, Christian-Albrechts-University of Kiel, Department of Economics.
  9. Algieri, Bernardina & Bracke, Thierry, 2007. "Patterns of current account adjustment: insights from past experience," Working Paper Series 0762, European Central Bank.
  10. Gossé, Jean-Baptiste & Serranito, Francisco, 2014. "Long-run determinants of current accounts in OECD countries: Lessons for intra-European imbalances," Economic Modelling, Elsevier, vol. 38(C), pages 451-462.

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