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Romanian current account sustainability after the adhesion to European Union

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  • Dumitriu, Ramona
  • Stefanescu, Răzvan

Abstract

After the fall of communist regime the Romanian current account passed from exceeds to substantial and persistent deficits. This evolution raised concerns over the country external sustainability. Since 2007, in the Romanian foreign trade dramatic changes occurred, being induced by the adhesion to European Union and by the global crisis. The adhesion to European Union stimulated both exports and imports. However, because the exports growth was much less consistent than the imports growth, the deficits of current account widened. Beginning with the end of 2008, the national economy was affected by the global crisis which discouraged both exports and imports. This time, because the decline of exports was less sharp than the decline of imports, the deficits of the Romanian current account narrowed. However, the country external sustainability is still an actual problem in the circumstances of the new challenges of a changing international context. In this paper we investigate the sustainability of the Romanian current account from January 2007 to January 2013. In our analysis we employ monthly values of the main components of the current account. We also use unit root and cointegration tests that allow taking into consideration the structural breaks. Our results suggest the deficits of the current account are not sustainable.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 51244.

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Date of creation: 05 Apr 2013
Date of revision: 05 Apr 2013
Handle: RePEc:pra:mprapa:51244

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Keywords: Romanian Current Account; Sustainability; Adhesion to European Union;

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