Current Account and External Sustainability in the Baltics, Russia, and Other Countries of the Former Soviet Union

McGettigan, Donal

doi:10.5089/9781557758262.084

Cited by 21 publications

(12 citation statements)

References 34 publications

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“…For instance, Mann (1999) defines current account deficit as being sustainable when continuation of current policy stance will not require a drastic shift or sudden stop (for instance, sudden tightening of monetary or fiscal policy which would cause a large recession) or lead to a recession (sharp increases in interest rates, a sudden depletion of reserves, or an exchange rate collapse). Whilst, Kaminsky et al (1998) andMcGettigan, (2000) have complemented the work of Milesi and Ferreti (1996) and have come up with a variety of indicators that they have used to empirically analyse the sustainability of different countries' current accounts. Furthermore, others have developed empirical models to assess the sustainability of current account.…”

Section: The Concept Of Current Account Sustainabilitymentioning

confidence: 99%

Sustainability of the Malawian current account deficit: Application of structural and solvency approaches

Nkuna¹

2013

J. Econ. Int. Finance

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The objective of the paper is to examine the sustainability of current account in Malawi. The study employs econometric analysis and solvency approaches to complement each other. Results from both approaches confirm that Malawi's current account deficits were excessive and unsustainable during the period of 1980 to 2010. Results from the econometric analysis reveal that for Malawi's current account to move towards a sustainable path, particular attention should be paid to the following factors: external debt, terms of trade, openness, real exchange rate, net foreign assets and growth. Furthermore, the current account deficit was excessively above the norm, deviating by an average of 5.0% during the study period. The solvency approach to current account sustainability further confirms that the country was running an unsustainable current account deficit. Interestingly, even after the highly indebted poor countries (HIPC) relief, the current account was still unsustainable. In this regard, policies should ensure that the real exchange rate is not overvalued, growth is enhanced particularly in the export sector and also ensure that external debt is sustainable. These will ensure sustainable current account.

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Section: The Concept Of Current Account Sustainabilitymentioning

confidence: 99%

Sustainability of the Malawian current account deficit: Application of structural and solvency approaches

Nkuna¹

2013

J. Econ. Int. Finance

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“…However, they conclude that it is difficult to identify a specific threshold of sustainability, beyond which a current account deficit tends to reverse. Other papers have explored this issue by examining various case studies, including Australia (Cashin and McDermott, 1996), ASEAN countries (Ostry, 1997), Eastern Europe (Roubini and Wachtel, 1998; McGettigan, 2000), and Latin America (Calvo et al., 1993; Corbo and Hernandez, 1996).…”

Section: Theories and Empirical Studies Of The Determination And Smentioning

confidence: 99%

Current Account Adjustment and Capital Flows*

Debelle

Galati

2007

Rev International Economics

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We examine episodes of current account adjustment in industrial countries over the past 30 years. We find that they were typically associated with a sizable growth slowdown and a large exchange rate depreciation. There was no discernible change in the nature of capital flows just prior to an adjustment. Hence, adjustments may be responding to the resolution of domestic imbalances rather than being an exogenous event. We show that global developments triggered the adjustment, possibly by triggering the unwinding of the domestic imbalances. Most of the ex post adjustment of the financial account was in private sector flows, primarily by foreign investors. Copyright � 2007 The Authors; Journal compilation � 2007 Blackwell Publishing Ltd.

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“…Another indicator of fiscal stance, proposed by Kapur and van der Mensbrugghe (1997) and McGettigan (2000) is public debt service, as percent of government revenue. This indicator serves to assess, although very imperfectly, the ability and willingness of government to service its obligations out of its current income.…”

Section: Debt Service To Government Revenuementioning

confidence: 99%