International Intertemporal Solvency in OECD Countries: Evidence From Panel Unit Root
AbstractThe purpose of this study is to investigate the sustainability of current account of 22 OECD countries by employing Liu and Tanner (1996) testing procedure. The procedure used here is to examine stationarity of current account. Using ADF unit root test on single time series, it is found that current account of most OECD countries have unit root. This outcome, however, might be due to the generally low power of this test. The aim of this paper is to reconsider this issue by exploiting the extra information provided by the combination of the time-series and cross-sectional data and the subsequent power advantages of panel data unit root tests. We apply the test advocated by Im, Pesaran and Shin (1997). According to estimation results current account deficits in OECD countries are sustainable.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 855.
Date of creation: 2006
Date of revision:
Publication status: Published in Praque Economic Papers 15.1(2006): pp. 44-49
panel data unit-root test; current account; solvency;
Other versions of this item:
- Huseyin Kalyoncu, 2006. "International Intertemporal Solvency in OECD Countries: Evidence from Panel Unit Root," Prague Economic Papers, University of Economics, Prague, vol. 2006(1), pages 44-49.
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F30 - International Economics - - International Finance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-25 (All new papers)
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