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The Persistence of Current Account Balances and its Determinants: The Implications for Global Rebalancing

Author

Listed:
  • Clower, Erica

    (Asian Development Bank Institute)

  • Ito, Hiro

    (Asian Development Bank Institute)

Abstract

This paper examines the statistical nature of the persistency of current account balances and its determinants. With the assumption that stationary current account series ensures the long-run budget constraint while countries may experience “local non-stationarity” in current account balances, the authors examine the dynamics of current account balances across a panel of 70 countries.

Suggested Citation

  • Clower, Erica & Ito, Hiro, 2012. "The Persistence of Current Account Balances and its Determinants: The Implications for Global Rebalancing," ADBI Working Papers 400, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0400
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    References listed on IDEAS

    as
    1. Nelson, Charles R & Piger, Jeremy & Zivot, Eric, 2001. "Markov Regime Switching and Unit-Root Tests," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 404-415, October.
    2. Hall, Stephen G & Psaradakis, Zacharias & Sola, Martin, 1999. "Detecting Periodically Collapsing Bubbles: A Markov-Switching Unit Root Test," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(2), pages 143-154, March-Apr.
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    Citations

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    Cited by:

    1. Eguren Martin, Fernando, 2016. "Exchange rate regimes and current account adjustment: An empirical investigation," Journal of International Money and Finance, Elsevier, vol. 65(C), pages 69-93.
    2. Agnieszka Gehringer, 2015. "New evidence on the determinants of current accounts in the EU," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(4), pages 769-793, November.
    3. Adnan Velic, 2017. "Current Account Imbalances, Real Exchange Rates, and Nominal Exchange Rate Variability," Trinity Economics Papers tep1417, Trinity College Dublin, Department of Economics.
    4. Christophe André & Tsangyao Chang & Luis A. Gil-Alana & Rangan Gupta, 2017. "Current Account Sustainability in G7 and BRICS: Evidence from a Long Memory Model with Structural Breaks," Working Papers 201705, University of Pretoria, Department of Economics.

    More about this item

    Keywords

    current account; financial liberalization; global imbalances; capital controls;

    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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