Medium-Term Determinants of Current Accounts in Industrial and Developing Countries: An Empirical Exploration

Author/Editor:

Menzie David Chinn ; Eswar S Prasad

Publication Date:

February 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper provides an empirical investigation of the medium-term determinants of current accounts for a large sample of industrial and developing countries. The analysis is based on a structural approach that highlights the roles of the fundamental macroeconomic determinants of saving and investment. Cross-section and panel regression techniques are used to characterize the properties of current account variation across countries and over time. Current account balances are positively correlated with government budget balances and initial stocks of net foreign assets. Among developing countries, measures of financial deepening are positively correlated while indicators of openness to international trade are negatively correlated with current account balances.

Series:

Working Paper No. 2000/046

Subject:

Balance of payments Current account Current account balance Current account deficits International trade National accounts Personal income Terms of trade

English

Publication Date:

February 1, 2000

ISBN/ISSN:

9781451846546/1018-5941

Stock No:

WPIEA0462000

Pages:

39

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