What Determines the Current Account? a Cross-Sectional and Panel Approach

Author/Editor:

Hamid Faruqee ; Guy Debelle

Publication Date:

June 1, 1996

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 uses cross-section and panel data to examine the determinants of the current account. The empirics find a significant impact of the stage of development and demographic factors in the cross section. Estimating partial-adjustment and error-correction models using panel data, the paper finds a short- and long-run impact of fiscal policy on the current account in the time series. The real exchange rate, the business cycle and the terms of trade are also shown to have short-run effects on the current account, while the stage of development and demographics have longer-run effects.

Series:

Working Paper No. 1996/058

Subject:

Balance of payments Current account Current account deficits External position Foreign assets International trade Public debt Terms of trade

English

Publication Date:

June 1, 1996

ISBN/ISSN:

9781451966701/1018-5941

Stock No:

WPIEA0581996

Pages:

42

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