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Accounting for US current account deficits: an empirical investigation

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  • Selahattin Dibooglu

Abstract

The sources of US current account deficits are investigated using a number of macroeconomic variables and a vector error correction model. The variables are those typically emphasized by the traditional income - expenditure approach and the intertemporal (Ricardian) approach. The results indicate that macroeconomic variables explain the current account reasonably well, and the evidence seems to support the traditional approach where budget deficits and increases in real interest rates and terms of trade are associated with current account deficits.

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  • Selahattin Dibooglu, 1997. "Accounting for US current account deficits: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 787-793.
    • Handle: RePEc:taf:applec:v:29:y:1997:i:6:p:787-793
    DOI: 10.1080/000368497326705
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    4. Herrmann, Sabine & Jochem, Axel, 2005. "Determinants of current account developments in the central and east European EU member states - consequences for the enlargement of the euro area," Discussion Paper Series 1: Economic Studies 2005,32, Deutsche Bundesbank.
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    6. Atrayee Ghosh Roy & Hendrik Van den Berg, 2009. "Budget deficits and U.S. economic growth," Economics Bulletin, AccessEcon, vol. 29(4), pages 3015-3030.
    7. Tosun, M. Umur & Iyidogan, Pelin Varol & Telatar, Erdinç, 2014. "The Twin Deficits in Selected Central and Eastern European Economies: Bounds Testing Approach with Causality Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 141-160, June.
    8. Trachanas, Emmanouil & Katrakilidis, Constantinos, 2013. "The dynamic linkages of fiscal and current account deficits: New evidence from five highly indebted European countries accounting for regime shifts and asymmetries," Economic Modelling, Elsevier, vol. 31(C), pages 502-510.
    9. Garg, Bhavesh & Prabheesh, K.P., 2017. "Drivers of India’s current account deficits, with implications for ameliorating them," Journal of Asian Economics, Elsevier, vol. 51(C), pages 23-32.
    10. Ahmad, Ahmad Hassan & Aworinde, Olalekan Bashir & Martin, Christopher, 2015. "Threshold cointegration and the short-run dynamics of twin deficit hypothesis in African countries," The Journal of Economic Asymmetries, Elsevier, vol. 12(2), pages 80-91.
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    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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