Current account sustainability in advanced economies
This paper investigates the sustainability of current accounts in advanced economies using a panel of 27 countries and annual data over the 1980-2008 period. Relying on various panel unit root tests and a sequential panel selection method, we find strong evidence in favour of nonlinear but stationary current account trajectories only for 7 countries, while the remaining 20 appear to be non-stationary and thus unsustainable. Our analysis indicates that careful empirical modelling of current account dynamics, particularly in relation to cross-section dependence and nonlinear behaviour, is crucial for appropriate economic policy-making.
Year of publication: |
2014
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Authors: | Lanzafame, Matteo |
Published in: |
The Journal of International Trade & Economic Development. - Taylor & Francis Journals, ISSN 0963-8199. - Vol. 23.2014, 7, p. 1000-1017
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Publisher: |
Taylor & Francis Journals |
Saved in:
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