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Current Account Deficits, Macroeconomic Policy Stance and Governance: An Empirical Investigation Author info | Abstract | Publisher info | Download info | Related research | Statistics Erdal Özmen () (Department of Economics, METU)
This paper empirically investigates the effects of institutional and macroeconomic policy stance variables on current account deficits (CAD). Based on cross-section data for a broad number of developing and industrial countries, the results strongly suggest that better governance increases whilst the presence of original sin decreases the ability of an economy to sustain CAD. Exchange rate flexibility and openness appear to put a discipline on CAD. Consistent with the equity home bias and Feldstein-Horioka puzzle, CAD decrease with country size. The net impacts of the financial deepening and monetary credibility on CAD are found to be insignificant.
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Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number
0414.
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Length: 11 pages
Date of creation: Oct 2004Date of revision:
Oct 2004Handle: RePEc:met:wpaper:0414Contact details of provider: Web page: http://www.erc.metu.edu.tr More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Erol Taymaz).
Keywords: Current Account ; Exchange Rate Regimes ; Original Sin ; Find related papers by JEL classification: F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2003.
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Brookings Papers on Economic Activity ,
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Maurice Obstfeld, 2004.
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Other versions: Jerry Coakley & Ana-Maria Fuertes & Fabio Spagnolo, 2004.
"Is the Feldstein-Horioka Puzzle History? ,"
Manchester School ,
University of Manchester, vol. 72(5), pages 569-590, 09.
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repec:rus:hseeco:181565 is not listed on IDEAS
repec:bep:maccon:v:2:y:2002:i:1:p:1021-1021 is not listed on IDEAS
James M. Nason & John H. Rogers, 2003.
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International Finance Discussion Papers
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Other versions:
James M. Nason & John H. Rogers, 2003.
"The present-value model of the current account has been rejected: Round up the usual suspects ,"
Working Paper
2003-7, Federal Reserve Bank of Atlanta.
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Computing in Economics and Finance 2001
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"Domestic Saving and International Capital Flows ,"
Economic Journal ,
Royal Economic Society, vol. 90(358), pages 314-29, June.
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