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Trade variables and Current Account “reversals”: Does the choice of definition matter? An application to Latin American countries

Author

Listed:
  • Sergio V. Barone

    (Universidad Nacional de Córdoba, Facultad de Ciencias Económicas (Córdoba, Argentina))

  • Ricardo Descalzi

    (Universidad Nacional de Córdoba, Facultad de Ciencias Económicas (Córdoba, Argentina))

  • Alberto M. Díaz Cafferata

    (Universidad Nacional de Córdoba, Facultad de Ciencias Económicas (Córdoba, Argentina))

Abstract

This paper demonstrates that the choice between alternative definitions of current account reversal suggested in the literature does matter for the identification of the frequency and dating of reversals. Using variables suggested by the solvency hypothesis three models of a random effect probity are estimated, and the results are compared to highlight the role of the statistical identification of “reversal” used in the exercise. Growth, exports, and changes in terms of trade, are significant, and have the expected signs. The results highlight both the critical role of trade variables in the genesis of reversals and that the choice of definition matters for the sign and significance of determinants. / Una reversión de la cuenta corriente es, en general, un cambio brusco, sustancial y sostenido del déficit, pero existen diversas propiedades estadísticas para su identificación empírica. En este trabajo se muestra que la elección entre definiciones específicas de reversión de la cuenta corriente usualmente utilizadas en la literatura modifica tanto el momento del tiempo en que se detecta la reversión, como el número de eventos en el período bajo estudio. Para mostrar de qué manera la definición afecta la identificación de las variables que causan la reversión, se estima un modelo probit de efectos aleatorios con tres definiciones alternativas y se comparan sus resultados.

Suggested Citation

  • Sergio V. Barone & Ricardo Descalzi & Alberto M. Díaz Cafferata, 2012. "Trade variables and Current Account “reversals”: Does the choice of definition matter? An application to Latin American countries," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 50(1), pages 123-141, Diciembre.
  • Handle: RePEc:ief:reveye:v:50:y:2012:i:1:p:123-141
    DOI: 10.55444/2451.7321.2012.v50.n1.10253
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    More about this item

    Keywords

    Current account; Debt; Reversal; Probit; Comparison;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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