Anthony Legg (Reserve Bank of Australia) Nalini Prasad (Reserve Bank of Australia) Tim Robinson (Reserve Bank of Australia)
Abstract
Since the late 1990s there have been substantial changes in the current account balances of a number of economies, most notably a marked widening in the current account deficit of the United States and increased net lending by many developing nations to developed economies. This paper uses panel data to examine what may have contributed to changes in the current account positions of a wide sample of developing and developed economies. In particular, we aim to assess the ‘global saving glut’ hypothesis that financial crises have contributed to the current account surpluses in developing economies. Overall, we find some support for this argument; there is a significant role for financial crises as well as institutional factors in determining current account balances. However, the model captures the broad trends evident in international capital flows for only some of the major regions in our sample.
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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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