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An Assessment of the Current Account Sustainability in Romania – An Inter-temporal Perspective

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Author Info
Dumitru, Ionut () (Academy of the Economic Studies Bucharest)
Dumitru, Ionela () (Academy of the Economic Studies Bucharest.)

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Abstract

This paper assesses the sustainability of the CA deficit in Romania by estimating its structural component, based on an inter-temporal perspective. Using a large sample of panel data, we estimated long term relationships for the CA deficit and its fundamentals. The main conclusion of the paper is that there is an excessive CA deficit which should be adjusted. The results are showing that the structural CA could range between 6.3% and 10.9% of GDP, depending on the model used and the econometric procedure. Another important result of the paper is that the main drivers of the CA deficit in Romania, as well for other transition countries of Europe, are the economic convergence factors.

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File URL: http://www.ipe.ro/rjef/rjef2_09/rjef2_09_2.pdf
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Publisher Info
Article provided by Institute for Economic Forecasting in its journal Romanian Journal for Economic Forecasting.

Volume (Year): 6 (2009)
Issue (Month): 2 (June)
Pages: 23-41
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Handle: RePEc:rjr:romjef:v:6:y:2009:i:2:p:23-41

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Related research
Keywords: structural CA deficit; convergence; relative income; Ricardian equivalence;

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

References listed on IDEAS
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    Other versions:
  4. Chinn, Menzie D. & Prasad, Eswar S., 2003. "Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration," Journal of International Economics, Elsevier, vol. 59(1), pages 47-76, January. [Downloadable!] (restricted)
    Other versions:
  5. Francesco Caselli & Silvana Tenreyro, 2005. "Is Poland the Next Spain?," NBER Working Papers 11045, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Hamid Faruqee & Martin Fetherston & Peter Isard & G. Russell Kincaid, 2001. "Methodology for Current Account and Exchange Rate Assessments," IMF Occasional Papers 209, International Monetary Fund.
  7. Kenneth Rogoff & Ashoka Mody & Nienke Oomes & Robin Brooks & Aasim M. Husain, 2004. "Evolution and Performance of Exchange Rate Regimes," IMF Occasional Papers 229, International Monetary Fund.
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  8. Joshua Aizenman & Daniel Riera-Crichton, 2006. "Real Exchange Rate and International Reserves in the Era of Growing Financial and Trade Integration," NBER Working Papers 12363, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "The intertemporal approach to the current account," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 34, pages 1731-1799 Elsevier. [Downloadable!] (restricted)
    Other versions:
  10. Gian Maria Milesi-Ferrett & Assaf Razin, 1996. "Sustainability of Persistent Current Account Deficits," NBER Working Papers 5467, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Andrea M. Maechler & Bas Berend Bakker & Christoph Duenwald & Piritta Sorsa & Andrew Tiffin, 2007. "Vulnerabilities in Emerging Southeastern Europe--How Much Cause for Concern?," IMF Working Papers 07/236, International Monetary Fund. [Downloadable!]
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This page was last updated on 2009-11-17.

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