| ||||
|
Abstract:
This paper examines the dynamics of current account adjustment among industrialized countries. We identify twenty-five episodes in which a large sustained improvement in the current account occurred between 1980 and 1997. We find that a typical current account reversal begins when the current account deficit is about 5 percent of GDP, that it is associated with slowing income growth and a 10-20 percent real exchange rate depreciation. Real export growth, declining investment, and an eventual leveling off in both the net international investment position and the budget deficit-GDP ratio are also likely to be part of the adjustment. These results suggest that current account reversals in industrialized countries are largely a function of the business cycle.
Full paper (60 KB PDF)
PDF files: Adobe Acrobat Reader ZIP files: PKWARE Home | IFDPs | List of 2000 IFDPs Accessibility To comment on this site, please fill out our feedback form. Last update: July 19, 2001 |
