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Structural and Cyclical Factors behind Current-Account Balances

  • Calista Cheung
  • Davide Furceri
  • Elena Rusticelli

Global external imbalances widened persistently over the last several years and have narrowed abruptly over the course of the financial crisis. Understanding the extent to which structural or cyclical factors may have driven these patterns is important to assess the likely evolution of global imbalances going forward, as well as the potential adjustment that can be achieved through changes in policy. This paper assesses the link between structural and cyclical factors and current-account balances using a panel of 94 countries from 1973 to 2008. We find that the medium-term evolution of global external imbalances can be related in large part to structural factors including cross-country differences in demographics, fiscal deficits, oil dependency and intensity, stage of economic development, financial market development, and institutional quality. Part of the narrowing in current-account balances since the financial crisis appears to be related to various cyclical factors including changes in output growth, oil prices, and exchange rates, and may be expected to reverse alongside the economic recovery. Les facteurs structurels et cycliques derrière l'évolution des comptes courantsGlobal external imbalances widened persistently over the last several years and have narrowed abruptly over the course of the financial crisis. Understanding the extent to whic Des déséquilibres externes mondiaux se sont élargis constamment au cours des dernières années et puis se sont réduits abruptement au cours de la crise financière. Comprendre dans quelle mesure des facteurs structurels ou cycliques ont conduit ces évolutions est important pour évaluer l'évolution probable des déséquilibres mondiaux à l’avenir, ainsi que l'ajustement potentiel qui peut être réalisé par des changements de la politique. Cette étude évalue les facteurs structurels et cycliques qui influencent des balances courantes en utilisant un panneau de 94 pays de 1973 à 2008. Nous constatons que l'évolution à moyen terme des déséquilibres externes mondiaux a été conduite en grande partie par des facteurs structurels comprenant des différences internationales dans la démographie, les déficits publics, la dépendance et l'intensité en pétrole, le niveau de développement économique, le développement des marchés financiers, et la qualité institutionnelle. Une partie du rétrécissement des équilibres de compte courant depuis la crise financière semble être liée à de divers facteurs cycliques comprenant des changements dans la croissance de la production, le prix du pétrole, et les taux de change, et pourrait s’inverser avec la reprise économique.c

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 775.

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Date of creation: 20 May 2010
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Handle: RePEc:oec:ecoaaa:775-en
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