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Current Account Imbalances: Signs of Adjustment?

Fuchs, Philipp LU (2015) NEKP01 20152
Department of Economics
Abstract
Global external imbalances are commonly labelled as one of the main reasons for the Global Financial Crisis. This paper investigates these imbalances and determines current account equilibria for 21 OECD countries. Subsequently, we measure the speed of adjustment to the calculated equilibrium values and test for asymmetric adjustment effects. We extend the approach of Gossé and Serranito (2014) in updating and extending their dataset and testing additional variables like the net foreign assets, population growth and trade openness. We find negative threshold values of around 3.8% below equilibrium. Countries below this threshold adjust significantly faster than countries above.
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author
Fuchs, Philipp LU
supervisor
organization
course
NEKP01 20152
year
type
H2 - Master's Degree (Two Years)
subject
keywords
dynamic ordinary least squares, panel cointegration, Current account imbalances, asymmetric panel VECM, threshold effects
language
English
id
8057336
date added to LUP
2015-11-05 11:06:39
date last changed
2015-11-05 11:06:39
@misc{8057336,
  abstract     = {Global external imbalances are commonly labelled as one of the main reasons for the Global Financial Crisis. This paper investigates these imbalances and determines current account equilibria for 21 OECD countries. Subsequently, we measure the speed of adjustment to the calculated equilibrium values and test for asymmetric adjustment effects. We extend the approach of Gossé and Serranito (2014) in updating and extending their dataset and testing additional variables like the net foreign assets, population growth and trade openness. We find negative threshold values of around 3.8% below equilibrium. Countries below this threshold adjust significantly faster than countries above.},
  author       = {Fuchs, Philipp},
  keyword      = {dynamic ordinary least squares,panel cointegration,Current account imbalances,asymmetric panel VECM,threshold effects},
  language     = {eng},
  note         = {Student Paper},
  title        = {Current Account Imbalances: Signs of Adjustment?},
  year         = {2015},
}