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

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  • Dumitru, Ionut

    ()
    (Academy of the Economic Studies Bucharest)

  • Dumitru, Ionela

    ()
    (Academy of the Economic Studies Bucharest.)

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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Bibliographic 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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References

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  1. Francesco Caselli & Silvana Tenreyro, 2005. "Is Poland the Next Spain?," NBER Working Papers 11045, National Bureau of Economic Research, Inc.
  2. Maurice Obstfeld and Kenneth Rogoff., 1994. "The Intertemporal Approach to the Current Account," Center for International and Development Economics Research (CIDER) Working Papers C94-044, University of California at Berkeley.
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Cited by:
  1. Isadora LAZAR & Madalina Ecaterina ANDREICA, 2013. "Current Account Balance, Private Debt And Euro Area Sovereign Debt Crisis: A Comparison Of North And South," Romanian Journal of Economics, Institute of National Economy, vol. 37(2(46)), pages 40-52, December.

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