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Current Account Imbalances in AsEAN Countries: Are they a Problem?

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  • Mr. Jonathan David Ostry

Abstract

Applying a consumption-smoothing model to five ASEAN countries reveals that excessive private consumption has not tended to characterize their widening external imbalances in recent years, except to a small degree in Indonesia and Malaysia. Beyond consumption smoothing, however, a number of factors influence the desirability of running large external deficits, including the level and composition of external liabilities, the flexibility of macroeconomic policies, and the health of banking systems. Even when the current account deficit appears sustainable, there is a case to reduce them in order to lower the risks arising from such factors.

Suggested Citation

  • Mr. Jonathan David Ostry, 1997. "Current Account Imbalances in AsEAN Countries: Are they a Problem?," IMF Working Papers 1997/051, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1997/051
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    Citations

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    Cited by:

    1. Mercereau, Benoît & Miniane, Jacques Alain, 2008. "Should We Trust the Empirical Evidence from Present Value Models of the Current Account?," Economics Discussion Papers 2008-10, Kiel Institute for the World Economy (IfW Kiel).
    2. Mr. Jacques A Miniane & Benoît Mercereau, 2004. "Challenging the Empirical Evidence From Present Value Models of the Current Account," IMF Working Papers 2004/106, International Monetary Fund.
    3. Ramkishen Rajan, 2010. "The Currency and Financial Crisis in Southeast Asia: A Case of 'Sudden Death' or Death Foretold'?," Working Papers id:2583, eSocialSciences.
    4. Benoît Mercereau, 2003. "The Role of Stock Markets in Current Account Dynamics: Evidence from the United States," IMF Working Papers 2003/108, International Monetary Fund.
    5. Guy Debelle & Gabriele Galati, 2007. "Current Account Adjustment and Capital Flows," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 989-1013, November.
    6. Nopphadon Buranathanung & Chaipat Poonpatpibul, 2002. "External Debt Dynamics and Current Account Sustainability," Working Papers 2002-03, Monetary Policy Group, Bank of Thailand.
    7. Ahmad Zubaidi Baharumshah & Hamizun Bin Ismail, 2012. "The present value model and Thailand's current account balance," Journal of Economic Studies, Emerald Group Publishing, vol. 39(3), pages 337-355, December.
    8. Graham Bird & Ramkishen S. Rajan, 2004. "Coping with, and Cashing in on, International Capital Volatility," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 11, pages 181-203, Palgrave Macmillan.
    9. Jaime Guajardo & Guillermo Le Fort, 1999. "Cuenta Corriente y Desvíos Transitorios en Términos de Intercambio y Volúmenes de Exportaciones: Chile 1985-1999," Working Papers Central Bank of Chile 49, Central Bank of Chile.
    10. Mr. Christian Thimann & Mrs. Anuradha Dayal-Gulati, 1997. "Saving in Southeast Asia and Latin America Compared: Searching for Policy Lessons," IMF Working Papers 1997/110, International Monetary Fund.
    11. Ramkishen S. Rejan, 1998. "The Currency And Financial Crisis In Southeast Asia - A Case Of `Sudden Deathã¢Â‚¬Â„¢ Or `Death Foretoldã¢Â‚¬Â„¢," Macroeconomics Working Papers 22381, East Asian Bureau of Economic Research.
    12. Sebastian Edwards, 2004. "Thirty Years of Current Account Imbalances, Current Account Reversals, and Sudden Stops," IMF Staff Papers, Palgrave Macmillan, vol. 51(s1), pages 1-49, June.
    13. Sebastian Edwards, 2004. "Thirty Years of Current Account Imbalances, Current Account Reversals and Sudden Stops," NBER Working Papers 10276, National Bureau of Economic Research, Inc.
    14. Ramón Moreno, 2008. "Experiences with Current Account Deficits in Southeast Asia," Central Banking, Analysis, and Economic Policies Book Series, in: Kevin Cowan & Sebastián Edwards & Rodrigo O. Valdés & Norman Loayza (Series Editor) & Klaus Schmidt- (ed.),Current Account and External Financing, edition 1, volume 12, chapter 14, pages 537-582, Central Bank of Chile.
    15. Noppadol Buranathanung & Chaipat Poonpatpibul, 2003. "External Debt Dynamics and Current Account Sustainability," Working Papers 2003-10, Monetary Policy Group, Bank of Thailand.
    16. Lau, Evan & Baharumshah, Ahmad Zubaidi & Habibullah, Muzafar Shah, 2007. "Accounting for the Current Account Behavior in ASEAN-5," MPRA Paper 1322, University Library of Munich, Germany.
    17. Lau, Evan & Baharumshah, Ahmad Zubaidi & Haw, Chan Tze, 2006. "Current account: mean-reverting or random walk behavior?," Japan and the World Economy, Elsevier, vol. 18(1), pages 90-107, January.
    18. Alpaslan AKÇORAOĞLU & Erkan AĞASLAN, 2009. "Current Account Deficits, Sustainability and Global Financial Crisis: Evidence from Turkey, 1987-2008," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 20(72), pages 1-20.
    19. Evan Lau & Ahmad Zubaidi Baharumshah, 2003. "Sustainability of External Imbalances: The Case of Malaysia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 48(01), pages 61-80.
    20. Diehl, Markus & Schweickert, Rainer, 1998. "Currency crises: Is Asia different?," Kiel Discussion Papers 309, Kiel Institute for the World Economy (IfW Kiel).
    21. Jenny Corbett & David Vines, 1998. "The Asian Crisis: Competing Explanations," SCEPA working paper series. 1998-12, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.

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