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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

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

  • Ricardo Descalzi

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

  • Alberto M. Díaz Cafferata

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

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.

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. 0(1), pages 123-141, January.
  • Handle: RePEc:ief:reveye:v:50:y:2012:i:1:p:123-141
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    References listed on IDEAS

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    More about this item

    Keywords

    Current Account; Debt; Reversal; Probit; Comparison.;

    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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