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Medium-Term Determinants of Current Accounts in Industrial and Developing Countries: An Empirical Exploration

Author

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  • Menzie David Chinn
  • Mr. Eswar S Prasad

Abstract

This paper provides an empirical investigation of the medium-term determinants of current accounts for a large sample of industrial and developing countries. The analysis is based on a structural approach that highlights the roles of the fundamental macroeconomic determinants of saving and investment. Cross-section and panel regression techniques are used to characterize the properties of current account variation across countries and over time. Current account balances are positively correlated with government budget balances and initial stocks of net foreign assets. Among developing countries, measures of financial deepening are positively correlated while indicators of openness to international trade are negatively correlated with current account balances.

Suggested Citation

  • Menzie David Chinn & Mr. Eswar S Prasad, 2000. "Medium-Term Determinants of Current Accounts in Industrial and Developing Countries: An Empirical Exploration," IMF Working Papers 2000/046, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2000/046
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    More about this item

    Keywords

    WP; developing country; GDP; GDP ratio; result; Current account variation; structural and macroeconomic determinants; saving-investment balance; current account position; current account determination; budget balance; current account sustainability; current account dynamics; developing country sample; Current account; Current account balance; Current account deficits; Personal income; Terms of trade; Africa;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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