We empirically investigate the effect of net external debt positions on the size of medium-term current account balances. We utilize an approach where net external debt positions dampen the widening of the current account balances. In a simple accounting framework, we find supportive evidence of...

In this paper, we contribute to the current literature on market disciplining of the sovereign governments of the developing countries by distinguishing both sides of the market discipline hypothesis by adopting three-stage least square estimation to incorporate the contemporaneous feedback...