In the mid-1980s Australia' Current Account Deficit (CAD) as a ratio of GDP reached 5 percent, that is double the historic average. Policymakers regarded this high CAD and the associated foreign debt was unsustainable and advocated the use of all policy levers to rein in the high CAD. Activist...

This paper presents a taxonomy of major macro-economic determinants of Australia's current account deficit during the operation of the crawling and floating exchange rate regimes during the decade 1977-1986. The econometric analysis of the impacts of external and internal shocks provide...