On Cyclicality in the Current and Financial Accounts: Evidence from Nine Industrial Countries
IMF Working Papers, March 1, 2005
Source details
- Canonical URL
- On Cyclicality in the Current and Financial Accounts: Evidence from Nine Industrial Countries
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Bibliographic details
- Authors: Jens R Clausen, Magda E. Kandil
- Published: March 1, 2005
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451860757.001
Objective and scope
- Investigates cyclical fluctuations in the current and financial (formerly capital) accounts of the balance of payments and major underlying components for nine industrial countries.
- Authors: Jens R Clausen, Magda E. Kandil
- Date: March 1, 2005
Empirical model and explanatory variables
- The empirical model uses as explanatory variables:
- domestic output growth
- price inflation
- real exchange rate fluctuations
- energy price inflation
- global growth
- regional growth
Key findings and evidence
- Evidence from the estimation of the model indicates the importance of fluctuations in output growth to the cyclicality of the current and financial account balances.
- "The necessary and sufficient condition to sustain a large current account deficit is high domestic growth, which tends to stimulate financial inflows and provides adequate resources for financing."
- Other factors appear to be less important to the cyclicality of the current and financial account balances and their negative correlations.
Subject matter and keywords
- Subject: Current account, Current account balance, Current account deficits, Financial account, Inflation
- Keywords: deficit, trading partner, value, WP