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Structural Policy Reforms and External Imbalances

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  • Mike Kennedy
  • Torsten Sløk

Abstract

It has been argued that one solution to global current account imbalances is for countries with current account surpluses to undertake structural reforms. This would raise their potential growth, which is assumed to put downward pressure on the current account position. This paper takes a closer look at how such structural reforms in labour markets, product markets, and financial markets could be expected to affect current accounts. It also tests empirically, using pooled time-series techniques (that control for the influence of relative cyclical positions, government fiscal balances and the real exchange rate), whether or not reforms in these areas would have any significant relationship with current accounts. The overall finding is that indicators of structural reforms do have a significant relationship with the current account but the contribution of these variables to explain current account positions is quite limited ... Politique de réformes structurelles et balances extérieures Il a été démontré qu’une solution au déséquilibre de la balance des opérations courantes dans les pays ayant un excédant serait d’entreprendre des réformes structurelles. Cela devrait augmenter leur potentiel de croissance, ce qui est supposé soulager la pression sur la situation de la balance des opérations courantes. Cet article examine de près comment de telles réformes structurelles dans les marchés financiers, du travail et de la production sont susceptibles d’influer les comptes courants. Il vérifie aussi empiriquement, au moyen d’un ensemble de séries temporelles techniques (lesquelles contrôlent l’influence des situations conjoncturelles relatives, l’équilibre budgétaire et le taux de changes réèl) si des réformes dans ces secteurs ont une relation significative avec les comptes courants. Il en ressort que ces indicateurs de réformes structurelles ont une relation significative avec les comptes courants, mais que la contribution de ces variables à l'explication de la ...

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File URL: http://dx.doi.org/10.1787/874440708453
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 415.

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Date of creation: 24 Jan 2005
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Handle: RePEc:oec:ecoaaa:415-en

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Related research

Keywords: current account; structural reforms; balance des opérations courantes; réforme structurelle;

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Cited by:
  1. S. Deroose & E. Flores & A. Turrini, 2006. "Proceedings from the ECFIN Workshop "The budgetary implications of structural reforms" - Brussels, 2 December 2005," European Economy - Economic Papers 248, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  2. Luiz de Mello & Pier Carlo Padoan & Linda Rousová, 2010. "Are Global Imbalances Sustainable?: Shedding Further Light on the Causes of Current Account Reversals," OECD Economics Department Working Papers 813, OECD Publishing.
  3. Clovis Kerdrain & Isabell Koske & Isabelle Wanner, 2011. "Current Account Imbalances: can Structural Reforms Help to Reduce Them?," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-44.
  4. Holger Zemanek & Ansgar Belke & Gunther Schnabl, 2010. "Current account balances and structural adjustment in the euro area," International Economics and Economic Policy, Springer, vol. 7(1), pages 83-127, May.
  5. S M Ali Abbas & Jacques Bouhga-Hagbe & Antonio Fat�s & Paolo Mauro & Ricardo C Velloso, 2011. "Fiscal Policy and the Current Account," IMF Economic Review, Palgrave Macmillan, vol. 59(4), pages 603-629, November.
  6. Clovis Kerdrain & Isabell Koske & Isabelle Wanner, 2010. "The Impact of Structural Policies on Saving, Investment and Current Accounts," OECD Economics Department Working Papers 815, OECD Publishing.
  7. Romain Duval & Jørgen Elmeskov, 2005. "The Effects of EMU on Structural Reforms in Labour and Product Markets," OECD Economics Department Working Papers 438, OECD Publishing.

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