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Current Account determinants in Southeast European (SEE) countries – panel approach

Author

Listed:
  • Radovan Kovačević

    () (University of Belgrade, Faculty of Economics, Kamenička 6, 11000 Belgrade, Serbia)

Abstract

The aim of this paper is to examine the relation between the current account balance and its determinants for a sample of 9 SEE countries (Bulgaria, Croatia, Romania, Moldova, Serbia, Bosnia and Herzegovina, Macedonia, Montenegro, and Albania) over the period from 2000 to 2015. After we had established the existence of panel cointegration in the sample, we estimated cointegration equations using FMOLS and DOLS estimator. The results show that real effective exchange rate appreciation had an adverse effect on the current account, while the net inflow of direct foreign investments has a positive impact, as private remittances. The survey also confirmed that the current account deficit in the SEE countries is persistent. The results indicate that the structural changes in the SEE countries should be carried out in order to reduce the CA deficit. Also, the appreciation of the national currency should be avoided, since it will lead to an increase in the CA deficit.

Suggested Citation

  • Radovan Kovačević, 2017. "Current Account determinants in Southeast European (SEE) countries – panel approach," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 35(2), pages 391-424.
  • Handle: RePEc:rfe:zbefri:v:35:y:2017:i:2:p:391-424
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    References listed on IDEAS

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    More about this item

    Keywords

    current account; persistence; real effective exchange rate; fiscal balance; SEE countries;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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