Current Account Imbalances in Sri Lanka and Taiwan: Long-run Adjustment Mechanisms and Policy Reaction

1992 ◽  
pp. 237-261
Author(s):  
Maxwell J. Fry ◽  
Simon Sosvilla-Rivero ◽  
Peter Burridge
Keyword(s):  
Sri Lanka ◽  
Current Account ◽  
Long Run ◽  
Current Account Imbalances ◽  
Adjustment Mechanisms ◽  
Account Imbalances

scholarly journals Unemployment and Current Account Imbalances in Nigeria

2020 ◽  
Vol 2 (12, 20) ◽  
Author(s):  
Ewere F.O. Okungbowa ◽  
◽  
Adesuwa O. Erediauwa ◽  
Keyword(s):  
Current Account ◽  
Unemployment Rate ◽  
Current Account Deficit ◽  
Output Growth ◽  
High Rate ◽  
Current Account Surplus ◽  
Long Run ◽  
Current Account Imbalances ◽  
Current Account Balances ◽  
Account Imbalances

This study explores the link that exists between unemployment and current account imbalances in Nigeria from 1980 to 2014. It adopted the ARDL bounds test approach. The result gave evidence for a long-run relationship between the variables and also revealed a significant and inverse relationship between current account surplus and unemployment. Showing that a 1% increase in current account balances in favour of export will lead to a drop in the unemployment rate by 0.117893%. This, therefore, implies that current account deficit will cause a fall in employment and in turn a rise in the unemployment rate. Consequently, current account deficit leads to wage differentials in favour of the exporting countries as against importing countries, like Nigeria, and as such triggers a high rate of unemployment. We strongly recommend diversification of the country’s export-base which may increase employment opportunities and in turn reduce the unemployment rate. Keywords: Unemployment, Employment, Current Account Balances, Balance of payment, Output growth

Income Inequality and Current Account Imbalances

2012 ◽  
Author(s):  
Michael Kumhof ◽  
Claire Lebarz ◽  
Romain G. Rancière ◽  
Alexander W. Richter ◽  
Nathaniel A. Throckmorton
Keyword(s):  
Income Inequality ◽  
Current Account ◽  
Current Account Imbalances ◽  
Account Imbalances

Income Inequality and Current Account Imbalances

2012 ◽  
Author(s):  
Michael Kumhof ◽  
Claire Lebarz ◽  
Romain G. Rancière ◽  
Alexander W. Richter ◽  
Nathaniel A. Throckmorton
Keyword(s):  
Income Inequality ◽  
Current Account ◽  
Current Account Imbalances ◽  
Account Imbalances

Re-examining the twin deficit hypothesis for major South Asian economies

2019 ◽  
Vol 12 (3) ◽  
pp. 265-287
Author(s):  
Shruti Shastri
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Interest Rate ◽  
Sri Lanka ◽  
South Asian ◽  
Current Account ◽  
Transmission Mechanism ◽  
Asian Countries ◽  
Content Type ◽  
Long Run

Purpose The purpose of this study is to revisit the twin deficit hypothesis (TDH) and provide insights into the transmission mechanism connecting budget deficits and current account deficits for five major South Asian countries, namely, India, Bangladesh, Pakistan Sri Lanka and Nepal for the period 1985-2016. Design/methodology/approach This study uses a multivariate framework including real interest rate, real exchange rate and real gross domestic product to avoid the possibility of incorrect inferences caused by omission of relevant mediating variables. The long-run relationship and causality are investigated through the autoregressive distributed lag bounds testing approach and Toda Yamamoto approach, respectively, for each individual country. The robustness of the results is assessed with the help of Westerlund’s cointegration test and group mean fully modified ordinary least squares (GM-FMOLS), group mean dynamic ordinary least square (GM-DOLS) and common correlated effect mean group (CCEMG) estimators in the panel framework. Findings Both time series and panel evidences indicate long-run relationship between budget balance (BB) and current account balance (CAB) together with the mediating variables. The results indicate bi-directional causation between the two balances for India and Bangladesh, TDH for Pakistan and Sri Lanka and the reverse causation from CAB to BB for Nepal. Regarding the transmission mechanism, the results indicate the absence of the causal chain postulated by Mundell–Fleming, which predicts that BB causes CAB via interest rate and exchange rate. A CCEMG estimate of the import demand function reveals a positive government spending elasticity of imports suggesting that BB affects CAB by direct impact through demand. Originality/value This study augments the twin deficit literature on South Asian countries by providing insights into the transmission mechanism connecting the BB and CAB. Moreover, the study provides robust evidences on the TDH by using both time series and panel data techniques.

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