External Sustainability and Gross Positions: are Brazilian external accounts sustainable?
This paper characterizes external sustainability in the presence of arbitrary gross international positions. The analysis is based on the response of net exports to net foreign liabilities, and is relevant for a growing literature using the same response function approach without any qualification for gross positions. In particular, we propose parametric and nonparametric formal tests for long run sustainability. We also develop a risk assessment methodology for medium run sustainability. We apply the method to the Brazilian economy, also building a new historical data set and a detailed offshore oil scenario which are of independent interest. The empirical results support external solvency and shows relatively well behaved risks of adjustment as judged by the historical experience
References listed on IDEAS
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- Pascal Towbin, 2013.
"Financial Integration And External Sustainability,"
International Journal of Finance & Economics,
John Wiley & Sons, Ltd., vol. 18(4), pages 375-395, October.
- Towbin, P., 2012. "Financial Integration and External Sustainability," Working papers 388, Banque de France.
- Gruber, Joseph W. & Kamin, Steven B., 2007. "Explaining the global pattern of current account imbalances," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 500-522, June.
- Christian Schoder & Christian R. Proaño & Willi Semmler, 2013. "Are The Current Account Imbalances Between Emu Countries Sustainable? Evidence From Parametric And Non‐Parametric Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(7), pages 1179-1204, November.
- Tomasz Wieladek & Sergi Lanau, 2012. "Financial Regulation and the Current Account," IMF Working Papers 12/98, International Monetary Fund.
- Gustavo Adler & Sebastian Sosa, 2013. "External Conditions and Debt Sustainability in Latin America," IMF Working Papers 13/27, International Monetary Fund. Full references (including those not matched with items on IDEAS)
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