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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.

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, June.
    • Handle: RePEc:bla:ausecr:v:22:y:1989:i:2:p:29-33
    DOI: 10.1111/j.1467-8462.1989.tb00322.x
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    Citations

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    Cited by:

    1. PAUL CASHIN & C. JOHN McDERMOTT, 1998. "Are Australia's Current Account Deficits Excessive?," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 346-361, December.
    2. 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.
    3. B.R. Parmenter & Philip D. Adams, 1989. "Economic Prospects: 1988‐89 to 1994‐95," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 22(3), pages 5-15, September.
    4. 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.
    5. André Cartapanis & Vincent Dropsy & Sophie Mametz, 2002. "The Asian Currency Crises: Vulnerability, Contagion, or Unsustainability," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 79-91, February.
    6. C. W. Murphy, 1989. "The Budget Strategy and Foreign Debt," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 22(4), pages 32-51, December.
    7. John T. Cuddington, 1997. "Analysing the Sustainability of Fiscal Deficits in Developing Countries," International Finance 9706001, University Library of Munich, Germany.
    8. Karl Whelan, 2013. "Sovereign default and the euro," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 29(3), pages 478-501, AUTUMN.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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, January.
    14. 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.

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