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Is the Current Account Deficit Sustainable?

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  • A. J. Makin

Abstract

This article argues that Australia's savings behaviour relative to its investment opportunities ensures a structural current account deficit which is fundamentally sustainable. In fact considerable scope seems to exist for it to widen further, irrespective of fiscal tightening that has occurred during the last few years, without alarming macroeconomic consequences. Copyright 1989 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

Suggested Citation

  • A. J. Makin, 1989. "Is the Current Account Deficit Sustainable?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 22(2), pages 29-33.
  • Handle: RePEc:bla:ausecr:v:22:y:1989:i:2:p:29-33
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-8462.1989.tb00322.x
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    Cited by:

    1. Jordan Shan & Fiona Sun, 1998. "Domestic Saving and Foreign Investment in Australia: A Granger Causality Test," International Economic Journal, Taylor & Francis Journals, vol. 12(4), pages 79-87.
    2. Ian Henderson, 2001. "Ted Evans to the Rescue," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 8(3), pages 277-288.
    3. Cashin, Paul & McDermott, C John, 1998. "Are Australia's Current Account Deficits Excessive?," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 346-361, December.
    4. Cuddington, John T., 1997. "Analyzing the sustainability of fiscal deficitsin developing countries," Policy Research Working Paper Series 1784, The World Bank.
    5. Karl Whelan, 2013. "Sovereign default and the euro," Oxford Review of Economic Policy, Oxford University Press, vol. 29(3), pages 478-501, AUTUMN.
    6. Wright, Robert S. & Gilmour, Karen & Matthews, Lynette & O'Mara, L. Paul, 1991. "Some Implications of Microeconomic Reform for the Macroeconomy and the Commodities Sector," 1991 Conference (35th), February 11-14, 1991, Armidale, Australia 145716, Australian Agricultural and Resource Economics Society.
    7. Cartapanis, Andre & Dropsy, Vincent & Mametz, Sophie, 2002. "The Asian Currency Crises: Vulnerability, Contagion, or Unsustainability," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 79-91, February.
    8. Neil Dias Karunaratne, 2008. "The Polemics and Empirics of the Sustainability of Australia’s Current Account Deficit - Revisited," Discussion Papers Series 364, School of Economics, University of Queensland, Australia.
    9. Karunaratne, Neil Dias, 2010. "The sustainability of Australia's current account deficits--A reappraisal after the global financial crisis," Journal of Policy Modeling, Elsevier, vol. 32(1), pages 81-97, January.
    10. Mateou, Nicos H. & Zombanakis, George A., 2009. "Fuzzy cognitive maps face the question of the Greek current account deficit sustainability," MPRA Paper 38574, University Library of Munich, Germany.
    11. Tony Makin, 1992. "Interventionism, Microeconomic Reform and the External Deficit," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 25(1), pages 15-21.

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