“…Periods of significant capital outflows from many European countries in recent years, particularly following the global financial crisis (GFC) of 2007/8 and the European sovereign debt crisis of 2010, have underscored the need for better understanding of the factors that determine a country's current account (hereafter CA ) position. This importance is highlighted from several perspectives relating to various aspects of the real economy including income distribution (Behringer & van Treek, 2018), the housing cycles (Arestis & Gonzalez‐Martinez, 2016; Maas, Mayer, & Rüth, 2018) and CA reversals (see, for example, Edwards, 2004 and Pancaro & Saborowski, 2015) to mention a few. For countries with large CA deficits, heavy reliance on capital inflows and/or huge foreign‐currency‐denominated debt translates to increased exposure and vulnerability to sudden shifts in investor sentiments.…”