Sustainability of the Macedonian Current Account
Most of the emerging European countries, including Republic of Macedonia, are faced with greater or smaller current account deficits, which raise the concern about their sustainability in the long run. This working paper examines the sustainability of the Macedonian current account deficit using the structural model of the current account. According to this model, the current account is viewed as the outcome of variations in macroeconomic “structural” determinants that influence the saving-investment balance. The results show that budget deficit, economic growth, FDI and financial intermediation are the variables that had an effect on the Macedonian current account in the period 1998-2009, and that the sustainable level of the current account deficit is in the range of 5.3%-9.1% of GDP. The current account deficit was fluctuating around this sustainable level most of the time, which indicates that external equilibrium was not jeopardized. However, in the period between the last quarter of 2007 and the first quarter of 2009, due to the two external shocks in this period (the global increase of prices and the global recession), the current account deficit was higher than the sustainable level, which suggested a violation of the external equilibrium. Although the equilibrium was restored later in 2009, this historical episode points out the need for structural reforms in the Macedonian economy in order to avoid repeating such episodes in the future.
|Date of creation:||Jun 2011|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box 401, Blvd. Kuzman Josifovski Pitu 1, Skopje 1000|
Phone: + 389 2 108 108
Fax: + 389 2 108 357
Web page: http://www.nbrm.mk
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aristovnik, Aleksander, 2007.
"Short- and medium-term determinants of current account balances in Middle East and North Africa countries,"
1974, University Library of Munich, Germany.
- Aleksander Aristovnik, 2007. "Short- And Medium-Term Determinants Of Current Account Balances In Middle East And North Africa Countries," William Davidson Institute Working Papers Series wp862, William Davidson Institute at the University of Michigan.
- Paolo Zanghieri, 2004. "Current Accounts Dynamics in new EU members: Sustainability and Policy Issues," Working Papers 2004-07, CEPII research center.
- Hanan Morsy, 2009.
"Current Account Determinants for Oil-Exporting Countries,"
IMF Working Papers
09/28, International Monetary Fund.
- Hanan Morsy, 2010. "Current Account Determinants For Oil-Exporting Countries," Working Papers 511, Economic Research Forum, revised Mar 2010.
- Aleksander Aristovnik, 2006.
"The Determinants & Excessiveness of Current Account Deficits in Eastern Europe & the Former Soviet Union,"
William Davidson Institute Working Papers Series
wp827, William Davidson Institute at the University of Michigan.
- Aristovnik, Aleksander, 2006. "The Determinants & Excessiveness of Current Account Deficits in Eastern Europe & the Former Soviet Union," MPRA Paper 483, University Library of Munich, Germany.
- Maurice Obstfeld & Kenneth Rogoff, 1994.
"The Intertemporal Approach to the Current Account,"
NBER Working Papers
4893, National Bureau of Economic Research, Inc.
- Obstfeld, Maurice & Rogoff, Kenneth, 1994. "The Intertemporal Approach to the Current Account," Center for International and Development Economics Research (CIDER) Working Papers 233395, University of California-Berkeley, Department of Economics.
- Maurice Obstfeld and Kenneth Rogoff., 1994. "The Intertemporal Approach to the Current Account," Center for International and Development Economics Research (CIDER) Working Papers C94-044, University of California at Berkeley.
- Herrmann, Sabine & Winkler, Adalbert, 2008.
"Financial markets and the current account: emerging Europe versus emerging Asia,"
Discussion Paper Series 1: Economic Studies
2008,05, Deutsche Bundesbank, Research Centre.
- Sabine Herrmann & Adalbert Winkler, 2009. "Financial markets and the current account: emerging Europe versus emerging Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 531-550, October.
- Dimitris K. Christopoulos & Miguel León-Ledesma, 2004.
"Current Account Sustainability in the US: What Do We Really Know About It?,"
Studies in Economics
0412, School of Economics, University of Kent.
- Christopoulos, Dimitris & León-Ledesma, Miguel A., 2010. "Current account sustainability in the US: What did we really know about it?," Journal of International Money and Finance, Elsevier, vol. 29(3), pages 442-459, April.
- Arratibel, Olga & Furceri, Davide & Martin, Reiner, 2008. "Real convergence in Central and Eastern European EU Member States: which role for exchange rate volatility?," Working Paper Series 0929, European Central Bank.
- 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.
- David H. Howard, 1989. "Implications of the U.S. current account deficit," International Finance Discussion Papers 350, Board of Governors of the Federal Reserve System (U.S.).
- Wickens, M. R. & Uctum, Merih, 1993. "The sustainability of current account deficits : A test of the US intertemporal budget constraint," Journal of Economic Dynamics and Control, Elsevier, vol. 17(3), pages 423-441, May.
- Howard, David H, 1989. "Implications of the U.S. Current Account Deficit," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 153-65, Fall.
- Adalbert Winkler, 2009. "Southeastern Europe: Financial Deepening, Foreign Banks and Sudden Stops in Capital Flows," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 84-97.
- Ca' Zorzi, Michele & Chudik, Alexander & Dieppe, Alistair, 2009. "Current account benchmarks for central and eastern Europe: a desperate search?," Working Paper Series 0995, European Central Bank.
- Jordi Prat & Leandro Medina & Alun H. Thomas, 2010. "Current Account Balance Estimates for Emerging Market Economies," IMF Working Papers 10/43, International Monetary Fund.
- Aristovnik, Aleksander, 2006. "How sustainable are current account deficits in selected transition economies?," MPRA Paper 485, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:mae:wpaper:2011-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jovica Mitik)
If references are entirely missing, you can add them using this form.