What do current account reversals in OECD countries tell us about the US case?
AbstractThis study examines macro-economic developments around reversals in current account deficits in 29 OECD countries over four decades and draws some inferences for the present US deficit. Estimates of a probit model indicate that the deepness of the deficit itself, absence of spare production capacity and a beginning real depreciation are factors that increase the likelihood of a current account reversal in the following year. For the US each of these three indicators of a reversal are now on, making a near reversal probable. Over the past 40 years half of the current account deficit reversals in the OECD area were followed by a recession in the countries concerned.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 111.
Date of creation: Aug 2006
Date of revision:
Current account adjustment; US; forecasting reversals;
Other versions of this item:
- Leo de Haan & Hubert Schokker & Anastassia Tcherneva, 2008. "What Do Current Account Reversals in OECD Countries Tell Us About the US Case?," The World Economy, Wiley Blackwell, vol. 31(2), pages 286-311, 02.
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-30 (All new papers)
- NEP-CBA-2006-09-30 (Central Banking)
- NEP-FMK-2006-09-30 (Financial Markets)
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