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Current Account Sustainability: Selected East Asian and Latin American Experiences

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  • Mr. Gian M Milesi-Ferretti
  • Assaf Razin

Abstract

A number of developing countries have run large and persistent current account deficits in both the late seventies/early eighties and in the early nineties, raising the issue of whether these persistent imbalances are sustainable. This paper puts forward a notion of current account sustainability and compares the experience of three Latin American countries-Chile, Colombia Mexico-and three East Asian countries-Korea, Malaysia and Thailand. It identifies a number of potential sustainability indicators and discusses their usefulness in predicting external crises.

Suggested Citation

  • Mr. Gian M Milesi-Ferretti & Assaf Razin, 1996. "Current Account Sustainability: Selected East Asian and Latin American Experiences," IMF Working Papers 1996/110, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:1996/110
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    More about this item

    Keywords

    WP; exchange rate; foreign direct investment; terms of trade; short-term debt; external shock; representative firm; debt neutrality result; investment decision; world debt table; debtor country; borrowing firm; debt flow; present discounted value; decision of a representative firm; Current account deficits; Current account imbalances; Current account; Real exchange rates; East Asia;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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