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On Cyclicality in the Current and Financial Accounts: Evidence from Nine Industrial Countries


  • Jens R Clausen

    (African Department, International Monetary Fund, 700 Nineteenth Street, Washington DC, USA)

  • Magda Kandil

    (Western Hemisphere Department, International Monetary Fund, 700 Nineteenth Street, Washington DC, USA)


The paper investigates cyclical fluctuations in the current and financial accounts of the balance of payments and major underlying components for nine industrial countries. Explanatory variables are domestic output growth, price inflation, real exchange rate fluctuations, energy price inflation, global growth, and regional growth. The evidence indicates the importance of fluctuations in output growth to the cyclicality of the current and financial balances. High domestic growth tends to stimulate financial inflows and provides adequate resources to finance a large current account deficit. Other factors appear to be less important to the cyclicality of the current and financial balances and their negative correlations. Eastern Economic Journal (2009) 35, 338–366. doi:10.1057/eej.2008.16

Suggested Citation

  • Jens R Clausen & Magda Kandil, 2009. "On Cyclicality in the Current and Financial Accounts: Evidence from Nine Industrial Countries," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 35(3), pages 338-366.
  • Handle: RePEc:pal:easeco:v:35:y:2009:i:3:p:338-366

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    References listed on IDEAS

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    Cited by:

    1. Aleksandar Stojkov, 2006. "A Survey Of Competing Theoretical Approaches To Current Account Determination," Journal Articles, Center For Economic Analyses, pages 1-32, June.
    2. Marcus Giamattei & Johann Lambsdorff, 2015. "Balancing the current account: experimental evidence on underconsumption," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 670-696, December.
    3. repec:trp:01jefa:jefa0004 is not listed on IDEAS
    4. Amira Karimova & Ahmet Caliskan & Jamshid Karimov, 2015. "Global Credit Supply and External Exposure in Turkey," European Journal of Economic and Political Studies, Fatih University, vol. 8(2), pages 15-34.
    5. João Falcão Silva & Vitor Lopes Silveira, 2017. "Portuguese economy: Statistical analysis on the current account reversal´s sustainability," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Statistical implications of the new financial landscape, volume 43 Bank for International Settlements.

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