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Are the current accounts of Asian-5 economies mean-reverting? New evidence from Fourier panel stationarity tests

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  • Jamal Husein
  • S. Murat Kara
  • Chuck Pier

Abstract

This study offers a novel examination of the mean-reversion properties of the current account balances, expressed as a percentage of GDP, for the Asian-5 economies: Indonesia, Korea, Malaysia, the Philippines, and Thailand. While prior studies mainly employed traditional unit-root tests, our research stands out for its use of novel panel stationarity tests that account for cross-sectional dependence and incorporate both sharp and smooth structural breaks via a Fourier function. Our findings robustly indicate the sustainability of the current accounts of the Asian-5 nations. The emphasis on the significance of structural breaks with a Fourier component sets this research apart, offering fresh perspectives on the intricacies of current account mean-reversion dynamics and the long-term sustainability implications for these economies.

Suggested Citation

  • Jamal Husein & S. Murat Kara & Chuck Pier, 2023. "Are the current accounts of Asian-5 economies mean-reverting? New evidence from Fourier panel stationarity tests," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2269758-226, October.
    • Handle: RePEc:taf:oaefxx:v:11:y:2023:i:2:p:2269758
    DOI: 10.1080/23322039.2023.2269758
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