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An Investigation of Current Account Solvency in Latin America Using Non Linear Nonstationarity Tests

  • Chortareas Georgios E

    ()

    (Bank of England)

  • Kapetanios George

    ()

    (Queen Mary University of London)

  • Uctum Merih

    ()

    (City University of New York)

Using a new methodology that allows nonlinearities, we find frequent support for external debt sustainability in a number of Latin American countries. Our findings reverse the results for several countries, obtained with traditional unit-root tests and present a richer framework for evaluating the external solvency of an economy. Our results also provide some justification for the assumption the international current accounts are based on.

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Article provided by De Gruyter in its journal Studies in Nonlinear Dynamics & Econometrics.

Volume (Year): 8 (2004)
Issue (Month): 1 (March)
Pages: 1-19

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Handle: RePEc:bpj:sndecm:v:8:y:2004:i:1:n:4
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  1. Fountas Stilianos & Wu Jyh-Lin, 1999. "Are the U.S. Current Account Deficits Really Sustainable?," International Economic Journal, Taylor & Francis Journals, vol. 13(3), pages 51-58.
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  7. Jerry Coakley & Ana-Maria Fuertes & Fabio Spagnolo, 2004. "The Feldstein-Horioka puzzle is not as bad as you think," Money Macro and Finance (MMF) Research Group Conference 2003 17, Money Macro and Finance Research Group.
  8. Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1999. "Trade surpluses and life-cycle saving behaviour," Economics Letters, Elsevier, vol. 65(2), pages 227-237, November.
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  10. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, June.
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