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Current account determinants in a globalized world

Author

Listed:
  • Mariam Camarero

    (University Jaume I and INTECO)

  • Josep Lluís Carrion-i-Silvestre

    (University of Barcelona and AQR-IREA)

  • Cecilio Tamarit

    (University of Valencia and INTECO)

Abstract

This paper investigates the determinants of external imbalances for a group of 26 developed and emerging countries over the period 1972–2021. In addition to traditional factors, the model incorporates the impact of external imbalances in third countries. The empirical evidence highlights the importance of accounting for parameter instabilities in modeling external imbalances, with countries exhibiting heterogeneous behavior in terms of the estimated break dates. The results underscore the critical role of external drivers, such as oil shocks, and the growing influence of third-country imbalances in an increasingly globalized world. Additionally, demographic trends emerge as a significant long-run internal driver. Finally, the paper calculates regime-specific short-run multipliers.

Suggested Citation

  • Mariam Camarero & Josep Lluís Carrion-i-Silvestre & Cecilio Tamarit, 2025. "Current account determinants in a globalized world," Empirical Economics, Springer, vol. 68(4), pages 1497-1527, April.
    • Handle: RePEc:spr:empeco:v:68:y:2025:i:4:d:10.1007_s00181-024-02686-w
    DOI: 10.1007/s00181-024-02686-w
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    More about this item

    Keywords

    Current account; Global factors; Structural break; Dynamic multipliers;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • 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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