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Are Middle Eastern Current Account Imbalances Excessive?

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Author Info

  • Paul Cashin
  • Samya Beidas-Strom

Abstract

Employing a dynamic panel regression, this study estimates the medium-term current account position for three subgroups of emerging market and developing countries with shared economic characteristics. The fundamental determinants of the macroeconomic balance approach to current account determination (arising from the IMF's Consultative Group on Exchange Rate (CGER)) are augmented by determinants relevant to Middle Eastern economies' current account positions. The study also assesses the deviation of the actual medium-term current account position of three Middle Eastern subgroups of countries (emerging markets; low-income and fragile economies; and net oil exporters) from their medium-term current account norms. Key findings are that: augmentation of the fundamental determinants yields plausible Middle Eastern current account norms; and in comparison with the medium-term current account norm, the actual and projected current account imbalances of each of the three subgroups are typically not excessive.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/195.

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Length: 55
Date of creation: 01 Aug 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/195

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Related research

Keywords: Middle East; Developing countries; Emerging markets; Middle East and Central Asia; Oil exporting countries;

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References

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  1. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  2. James M. Nason & John H. Rogers, 1999. "Investment and the current account in the short run and the long run," International Finance Discussion Papers 647, Board of Governors of the Federal Reserve System (U.S.).
  3. Damiano Sandri, 2011. "Precautionary Savings and Global Imbalances in World General Equilibrium," IMF Working Papers 11/122, International Monetary Fund.
  4. Juan Pablo Medina G. & Anella Munro & Claudio Soto G., 2007. "What Drives the Current Account in Commodity-Exporting Countries? The Cases of Chile and New Zealand," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 10(3), pages 67-114, December.
  5. Patrick A. Imam, 2008. "Rapid Current Account Adjustments: Are Microstates Different?," IMF Working Papers 08/233, International Monetary Fund.
  6. Paul Cashin & Christopher J. Kent, 2003. "The Response of the Current Account to Terms of Trade Shocks: Persistence Matters," IMF Working Papers 03/143, International Monetary Fund.
  7. Lone Engbo Christiansen & Alessandro Prati & Luca Antonio Ricci & Thierry Tressel, 2009. "External Balance in Low Income Countries," IMF Working Papers 09/221, International Monetary Fund.
  8. Jordi Prat & Leandro Medina & Alun H. Thomas, 2010. "Current Account Balance Estimates for Emerging Market Economies," IMF Working Papers 10/43, International Monetary Fund.
  9. Fuad Hasanov & Rabah Arezki, 2009. "Global Imbalances and Petrodollars," IMF Working Papers 09/89, International Monetary Fund.
  10. Hanan Morsy, 2009. "Current Account Determinants for Oil-Exporting Countries," IMF Working Papers 09/28, International Monetary Fund.
  11. Jaewoo Lee & Jonathan David Ostry & Alessandro Prati & Luca Antonio Ricci & Gian-Maria Milesi-Ferretti, 2008. "Exchange Rate Assessments: CGER Methodologies," IMF Occasional Papers 261, International Monetary Fund.
  12. Aizenman, Joshua & Jinjarak, Yothin, 2008. "Current account patterns and national real estate markets," Santa Cruz Department of Economics, Working Paper Series qt1rh4s127, Department of Economics, UC Santa Cruz.
  13. Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises: A New Database," IMF Working Papers 08/224, International Monetary Fund.
  14. Paul Cashin & C. John McDermott, 2003. "Intertemporal Substitution and Terms-of-Trade Shocks," Review of International Economics, Wiley Blackwell, vol. 11(4), pages 604-618, 09.
  15. A. Senhadji Semlali & Charles Collyns, 2002. "Lending Booms, Real Estate Bubbles and The Asian Crisis," IMF Working Papers 02/20, International Monetary Fund.
  16. Ronald MacDonald & Luca Antonio Ricci, 2003. "Estimation of the Equilibrium Real Exchange Rate for South Africa," IMF Working Papers 03/44, International Monetary Fund.
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  18. Bond, Stephen Roy & Hoeffler, Anke & Temple, Jonathan, 2001. "GMM Estimation of Empirical Growth Models," CEPR Discussion Papers 3048, C.E.P.R. Discussion Papers.
  19. Emilio Pineda & Paul Cashin & Yan Sun, 2009. "Assessing Exchange Rate Competitiveness in the Eastern Caribbean Currency Union," IMF Working Papers 09/78, International Monetary Fund.
  20. Daniel Leigh & Abdul Abiad & Ashoka Mody, 2007. "International Finance and Income Convergence: Europe is Different," IMF Working Papers 07/64, International Monetary Fund.
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Cited by:
  1. Branko Urošević & Milan Nedeljković & Emir Zildžović, 2012. "Jackknife Model Averaging of the Current Account Determinants," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(3), pages 267-281, June.

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