An assessment of the sustainability of current account imbalances in OECD countries

• Autores: María Amparo Camarero Olivas, Josep Lluís Carrión i Silvestre, Cecilio Tamarit Escalona
• Localización: Papeles de trabajo del Instituto de Estudios Fiscales. Serie economía, ISSN 1578-0252, Nº 16, 2009, págs. 3-74
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • In this paper we analyze the solvency and the sustainability of the current account for a group of twenty OECD countries using panel data methods. We test for the main hypotheses that have been formulated following both the flow and stock approaches in an intertemporal setting. Moreover, we also formulate a unified testable model based on Gourinchas and Rey(2007). The main results of the models can be tested using stationarity tests. For this purpose, we apply panel stationarity tests allowing for structural breaks and cross-section dependence. The evidence points to the solvency of the external accounts;

    however, the two variables evolve around a shifting deterministic component implying, hence, the non sustainability of the external position in most of the countries considered. We estimate, also allowing for structural breaks, the reduced-form parameters linking the two variables, following Gourinchas and Rey. This relationships is estimated for the sub-periods defined by the breaks.

    For the majority of the countries and time-periods the parameters are positive, smaller than one and significant, as expected. Concerning the dynamics, we find that solvency is reconvered after major shocks affecting the countries' external accounts.