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Current Account Balance Estimates for Emerging Market Economies

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  • Jordi Prat
  • Leandro Medina
  • Mr. 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 & Mr. Alun H. Thomas, 2010. "Current Account Balance Estimates for Emerging Market Economies," IMF Working Papers 2010/043, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2010/043
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    Cited by:

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    2. Afonso, António & Huart, Florence & Tovar Jalles, João & Stanek, Piotr, 2022. "Twin deficits revisited: A role for fiscal institutions?," Journal of International Money and Finance, Elsevier, vol. 121(C).
    3. Mr. Paul Cashin & Samya Beidas-Strom, 2011. "Are Middle Eastern Current Account Imbalances Excessive?," IMF Working Papers 2011/195, International Monetary Fund.
    4. Pucar Emilija Beker & Glavaški Olgica, 2019. "Macroeconomic Еxternal (Im)Balances within the Eurozone: Core Vs Periphery," Economic Themes, Sciendo, vol. 57(3), pages 257-272, September.
    5. 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 Emerging Economies (BOFIT).
    6. Yin-Wong Cheung, 2012. "Exchange Rate Misalignment - The Case of the Chinese Renminbi," CESifo Working Paper Series 3797, CESifo.
    7. Comunale, Mariarosaria, 2018. "Current account and real effective exchange rate misalignments in Central Eastern EU countries: An update using the macroeconomic balance approach," Economic Systems, Elsevier, vol. 42(3), pages 414-436.
    8. Teresa Sastre & Francesca Viani, 2014. "Countries’ safety and competitiveness, and the estimation of current account misalignments," Working Papers 1401, Banco de España.
    9. Mar Delgado-Téllez & Enrique Moral-Benito & Francesca Viani, 2020. "An anatomy of the Spanish current account adjustment: the role of permanent and transitory factors," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 11(4), pages 501-529, December.
    10. Comunale, Mariarosaria, 2022. "A panel VAR analysis of macro-financial imbalances in the EU," Journal of International Money and Finance, Elsevier, vol. 121(C).
    11. Mariarosaria Comunale, 2016. "A Closer Look at EU Current Accounts," CEIS Research Paper 393, Tor Vergata University, CEIS, revised 11 Aug 2016.
    12. repec:bof:bofitp:urn:nbn:fi:bof-201510131420 is not listed on IDEAS
    13. Mariarosaria Comunale, 2015. "Current Account and Reer Misalignments in Central Eastern EU Countries: an Update Using the Macroeconomic Balance Approach," Bank of Lithuania Working Paper Series 20, Bank of Lithuania.
    14. repec:zbw:bofitp:urn:nbn:fi:bof-201510131420 is not listed on IDEAS
    15. Hugo Fuentes-Dávila & Juan Tenorio, 2023. "El equilibrio en la cuenta corriente y sus implicancias en el tipo de cambio real en Perú," Working Papers 196, Peruvian Economic Association.
    16. 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.
    17. Valerio Della Corte & Claire Giordano, 2021. "Methodological issues in the estimation of current account imbalances," Questioni di Economia e Finanza (Occasional Papers) 617, Bank of Italy, Economic Research and International Relations Area.
    18. 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.
    19. 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.
    20. 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.
    21. Artem Vdovychenko, 2021. "Empirical estimation of REER trend for Ukraine," IHEID Working Papers 06-2021, Economics Section, The Graduate Institute of International Studies.
    22. repec:zbw:bofitp:2015_028 is not listed on IDEAS

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