IDEAS home Printed from https://ideas.repec.org/p/bru/bruppp/03-14.html
   My bibliography  Save this paper

Red Signals: Trade Deficits and the Current Account

Author

Listed:
  • marzia raybaudi
  • martin sola

    ()

  • fabio spagnolod

Abstract

This paper proposes a method to asses the potential problems of sustainability of a country’s sovereign debt. We claim that the relevant variables used for this analysis are typically subject to changes which are associated with changes in macroeconomics policies. We propose a procedure for identifying periods under which the trade deficit and the current account accumulate at a nonstationary rate. Our approach is based on imposing identifying restrictions on Markov switching type models. An empirical application of the procedure to UK data is examined and discussed.We find that periods of non-stationary trade deficits typically coincide with current account crises.

Suggested Citation

  • marzia raybaudi & martin sola & fabio spagnolod, 2003. "Red Signals: Trade Deficits and the Current Account," Public Policy Discussion Papers 03-14, Economics and Finance Section, School of Social Sciences, Brunel University.
  • Handle: RePEc:bru:bruppp:03-14
    as

    Download full text from publisher

    File URL: http://www.brunel.ac.uk/329/efwps/03-14.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Goudie, A W & Meeks, G, 1991. "The Exchange Rate and Company Failure in a Macro-Micro Model of the UK Company Sector," Economic Journal, Royal Economic Society, vol. 101(406), pages 444-457, May.
    2. G. S. Maddala, 1987. "Limited Dependent Variable Models Using Panel Data," Journal of Human Resources, University of Wisconsin Press, vol. 22(3), pages 307-338.
    3. Young, Garry, 1995. "Company Liquidations, Interest Rates and Debt," The Manchester School of Economic & Social Studies, University of Manchester, vol. 63(0), pages 57-69, Suppl..
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    5. Dickerson, Andrew P & Gibson, Heather D & Tsakalotos, Euclid, 1997. "The Impact of Acquisitions on Company Performance: Evidence from a Large Panel of UK Firms," Oxford Economic Papers, Oxford University Press, vol. 49(3), pages 344-361, July.
    6. Peel, MJ & Peel, DA & Pope, PF, 1986. "Predicting corporate failure-- Some results for the UK corporate sector," Omega, Elsevier, vol. 14(1), pages 5-12.
    7. Machin, Stephen & Van Reenen, John, 1993. "Profit Margins and the Business Cycle: Evidence from UK Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 29-50, March.
    8. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
    9. Nicholas Wilson & Kwee Chong & Michael Peel & A. N. Kolmogorov, 1995. "Neural Network Simulation and the Prediction of Corporate Outcomes: Some Empirical Findings," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 2(1), pages 31-50.
    10. Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
    11. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-764, May.
    12. Geroski, P. A. & Gregg, P., 1996. "What makes firms vulnerable to recessionary pressures?," European Economic Review, Elsevier, vol. 40(3-5), pages 551-557, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bru:bruppp:03-14. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John.Hunter). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.