Global current account imbalances were a major subject of concern in the years before the recent financial crisis. It is shown that the expected (negative) equilibrium relationship between net foreign assets and the trade balance that had held in the previous twenty years appeared to break down...

The US dollar is the most prevalent currency to settle internationally traded merchandise. A few existing studies demonstrate that the US dollar can significantly impact a country's trade balance with a non-US partner. Nevertheless, the current literature indicates the remarkable deficiency of...

Purpose This study aims to examine the impact of fiscal deficit, exchange rate and trade openness on current account deficit (CAD). The study tried to empirically investigate the 'twin deficits hypothesis' and 'compensation hypothesis' in the Indian context. Design/methodology/approach...

Previous studies have mostly focused on the relationship between macroeconomic shocks and trade balance adjustments of resource-rich countries while largely overlooked countries with trade composition of high resource-export and strong import-dependence such as Papua New Guinea. Utilising a...

This paper examines the effects of border-adjusted consumption taxes (mainly value added taxes or VATs) in a sample of 34 advanced economies from 1970 through 2015. We find that the real exchange rate tends to rise by the full amount of any consumption tax increase, with little effect on the...

China's trade surplus is often heavily criticized in political and economic debates, accompanied by claims for a revaluation of the Chinese currency, the Renminbi (RMB). While the main arguments exchanged in the current discourse appear to become more and more emotionally loaded rather than...

This paper examines the persistent deterioration in the international external position of the U.S. over the past 60 years. I develop a model without Ponzi schemes and arbitrage opportunities that accounts for both the secular rise and the cyclical variations in the U.S. international debt...

Rising current account and merchandise trade imbalances marked the years before the global financial and economic crisis. These imbalances either contributed to or precipitated the crisis and to the extent that they create systemic risks, it is desirable that they be reduced. There are many...

In this paper, we investigate the relationship between different loan types and the current account balance along with its sub-components. Our empirical results suggest that a rise in total loans inevitably leads to a deterioration in the current account balance. This relationship is preserved...