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Current Account Balance Estimates for Emerging Market Economies

Author

Listed:
  • Jordi Prat
  • Leandro Medina
  • Alun H. Thomas

Abstract

This paper uses a modified version of the methodology used by the IMF's Consultative Group on Exchange Rate Issues (CGER) to calculate equilibrium current account balances (or ?norms?) for a sample of 33 emerging market economies. We find that the fundamental determinants of the equilibrium current account balances are similar to those identified by the CGER using a sample that also comprises advanced economies. However, the fiscal balance has a considerably stronger impact on current account norms for emerging markets. This paper also offers estimates for the equilibrium current account balances of eleven smaller emerging market economies that are not currently included in the country sample used by the CGER.

Suggested Citation

  • Jordi Prat & Leandro Medina & Alun H. Thomas, 2010. "Current Account Balance Estimates for Emerging Market Economies," IMF Working Papers 10/43, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:10/43
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    References listed on IDEAS

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    1. Philip R. Lane & Gian Maria Milesi-Ferretti, 2004. "The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 841-857, November.
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    3. Irineu E de Carvalho Filho & Rudolfs Bems, 2009. "Exchange Rate Assessments; Methodologies for Oil Exporting Countries," IMF Working Papers 09/281, International Monetary Fund.
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    6. Ehsan U. Choudhri & Mohsin S. Khan, 2005. "Real Exchange Rates in Developing Countries: Are Balassa-Samuelson Effects Present?," IMF Staff Papers, Palgrave Macmillan, vol. 52(3), pages 1-2.
    7. Jesmin Rahman, 2008. "Current Account Developments in New Member States of the European Union; Equilibrium, Excess, and EU-Phoria," IMF Working Papers 08/92, International Monetary Fund.
    8. Russell Smyth, 2007. "Asia'S Booming Economies A Decade After The Crisis," Economic Papers, The Economic Society of Australia, vol. 26(3), pages 193-195, September.
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    Citations

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    Cited by:

    1. Milan Nedeljkovic & Branko Uroševic & Emir Zildžovic, 2012. "Jackknife Model Averaging of the Current Account Determinants," Working papers 23, National Bank of Serbia.
    2. Mariarosaria Comunale, 2016. "A Closer Look at EU Current Accounts," CEIS Research Paper 393, Tor Vergata University, CEIS, revised 11 Aug 2016.
    3. Paul Cashin & Samya Beidas-Strom, 2011. "Are Middle Eastern Current Account Imbalances Excessive?," IMF Working Papers 11/195, International Monetary Fund.
    4. Comunale, Mariarosaria, 2015. "Current account and REER misalignments in Central Eastern EU countries: an update using the macroeconomic balance approach," BOFIT Discussion Papers 28/2015, Bank of Finland, Institute for Economies in Transition.
    5. Danica Unevska Andonova & Branimir Jovanovic, 2011. "Sustainability of the Macedonian Current Account," Working Papers 2011-06, National Bank of the Republic of Macedonia.
    6. Calista Cheung & Davide Furceri & Elena Rusticelli, 2013. "Structural and Cyclical Factors behind Current Account Balances," Review of International Economics, Wiley Blackwell, vol. 21(5), pages 923-944, November.
    7. Yin-Wong Cheung, 2012. "Exchange Rate Misalignment - The Case of the Chinese Renminbi," CESifo Working Paper Series 3797, CESifo Group Munich.
    8. Mariarosaria Comunale, 2015. "Current Account and Real Effective Exchange Rate Misalignments in Central Eastern EU Countries: an Update Using the Macroeconomic Balance Approach," CEIS Research Paper 360, Tor Vergata University, CEIS, revised 13 Nov 2015.
    9. repec:bof:bofitp:urn:nbn:fi:bof-201510131420 is not listed on IDEAS
    10. The SEACEN Centre, 2013. "Finding Asia’s New Sustainable Growth Model Post GFC: The Role of the Central Banks (Proceedings of High-Level Conference)," Research Studies, South East Asian Central Banks (SEACEN) Research and Training Centre, number rp91, April.
    11. Bernd Schnatz, 2011. "Global Imbalances And The Pretence Of Knowing Fundamental Equilibrium Exchange Rates," Pacific Economic Review, Wiley Blackwell, vol. 16(5), pages 604-615, December.
    12. Harald Badinger & Aurélien Fichet de Clairfontaine & Wolf Heinrich Reuter, 2017. "Fiscal Rules and Twin Deficits: The Link between Fiscal and External Balances," The World Economy, Wiley Blackwell, vol. 40(1), pages 21-35, January.
    13. Teresa Sastre & Francesca Viani, 2014. "Countries’ safety and competitiveness, and the estimation of current account misalignments," Working Papers 1401, Banco de España;Working Papers Homepage.
    14. Hakan KARA & Çağrı SARIKAYA, 2013. "Türkiye’de Konjonktürel Etkilerden Arındırılmış Cari İşlemler Dengesi," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 28(332), pages 09-32.
    15. António Afonso & Florence Huart & João Tovar Jalles & Piotr Stanek, 2018. "Twin Deficits Revisited: a role for fiscal institutions?," Working Papers REM 2018/31, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    16. Yıldız AKKAYA & Refet S. GÜRKAYNAK, 2012. "Cari açık, bütçe dengesi, finansal istikrar ve para politikası: Heyecanlı bir dönemin izi," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 27(315), pages 93-119.
    17. Enrique Moral-Benito & Francesca Viani, 2017. "An anatomy of the spanish current account adjustment: the role of permanent and transitory factors," Working Papers 1737, Banco de España;Working Papers Homepage.
    18. Ghassan, Hassan B. & Al-Jefri, Essam H., 2016. "الحساب الجاري للاقتصاد السعودي عبر نموذج داخلي الزمن دلائل من منهجية نموذج التقهقر الذاتي البنيوي
      [The Current Account of Saudi Economy through Intertemporal Model: Evidence from SVAR]
      ," MPRA Paper 80302, University Library of Munich, Germany, revised Jun 2017.

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