(Short- and Long-Term Causes of Current Account Deficit in India and its Implications)

2015 ◽  
Author(s):  
Woong Lee
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Short And Long Term

scholarly journals Structural and cyclical factors of Serbia’s current account

2018 ◽  
Vol 63 (217) ◽  
pp. 75-97 ◽  
Author(s):  
Radovan Kovacevic
Keyword(s):  
Current Account ◽  
Structural Changes ◽  
Current Account Deficit ◽  
Current Account Balance ◽  
Full Time ◽  
Structural Factors ◽  
Crisis Period ◽  
The Impact ◽  
The Current Account

This paper examines the impact of structural and cyclical factors on Serbia?s current account. We have applied several filters to turn off the long-term (structural) component and isolate the influence of cyclical factors. In this paper, we show that structural factors were more important determinants of the current account deficit in the full-time sample (1997-2016), while cyclical factors showed a stronger impact in the post-crisis period when the deficit was reduced. Although they lost their intensity during the crisis and in the post-crisis period, the structural factors determine the trend of the current account balance in the long-term. For further improvement of the current account, measures to increase exports should be taken. The structural changes of production, the wider range of support for export financing to small and medium-sized enterprises, and the application of advanced technologies in manufacturing could help to reduce the trade deficit, making the current account deficit sustainable.

scholarly journals GROWTH AND TECHNOLOGICAL-FINANCIAL DEPENDENCE CYCLES: FOLLOWING THE PREBISCH FOOTPRINT

2020 ◽  
Vol 24 (1) ◽  
Author(s):  
Fabián Amico
Keyword(s):  
Latin America ◽  
Structural Change ◽  
Current Account ◽  
Capital Flows ◽  
Current Account Deficit ◽  
General Context ◽  
Financial Flows

ABSTRACT This text reread the contribution of Prebisch in the era of deregulated financial flows, interpreted in a more general context of demand-driven growth, with the incorporation of capital flows as significant components of external dynamics. Given that the largest economies in Latin America cannot grow driven solely by exports, then the growth of these economies will present a trend towards the trade and current account deficit that will require a net influx of capital. Under certain conditions, this dynamic can be sustainable or not, with various implications for growth. The long-term balance between imports and exports will remain crucial, as in the original Prebisch vision. However, contrary to conventional views, the effects of capital flows can be very important for a strategy to promote structural change.

scholarly journals The New Wave of Currency Devaluations in Africa – Will the Devalued Birr Help the Coffee Exports?

2019 ◽  
Vol 12 (4.) ◽  
pp. 101-118
Author(s):  
Szabolcs Pasztor
Keyword(s):  
Developing Countries ◽  
Current Account Deficit ◽  
Balance Of Payments ◽  
New Wave ◽  
Long Run ◽  
Negative Effect ◽  
Short And Long Term ◽  
Coffee Sector ◽  
The Impact

Despite the fact that currency devaluations are likely to have a negative effect on the economy in the long run, Ethiopia devalued its national currency, the birr (ETB), by 15 percent in 2017. They turned to this option in the hope of attracting more investments from abroad, decreasing import bills, improving the current account deficit and giving a boost to the exports of the coffee sector. A couple of months later, the impact seems to be promising because the export has been revived in some areas. However, it has to be stressed that the imported commodities may experience a price increase, there can be a widening balance of payments deficit and rising inflation. The paper aims to shed more light on the short- and long-term impacts of currency devaluations in the developing countries with a special emphasis on Ethiopia. Also, the recent Ethiopian measure is to be analyzed in greater detail highlighting the impacts on export earnings, import bills, the balance of payments, and on the overall competitiveness of the coffee sector.

scholarly journals Effective Use of Foreign Debt, the Case for Turkey

2015 ◽  
Vol 3 (2) ◽  
pp. 107
Author(s):  
S. Cem Karaman
Keyword(s):  
Private Sector ◽  
Current Account ◽  
Government Spending ◽  
Current Account Deficit ◽  
Foreign Debt ◽  
Current Account Balance ◽  
Short Term ◽  
Macroeconomic Variables ◽  
Foreign Borrowing

An advanced financial system is regarded as a hallmark of development. Lending or borrowing money, or debt, plays a vital role in an economy. But just like any other economic decision, borrowing requires a thorough analysis of contingencies. Debt may lead to prosperity through sound investment, or it may overwhelm firms/people when not used properly. In today’s circumstances, borrowing from world financial markets is easier than ever before. In this paper, the possibility of foreign borrowing helping Turkey to improve its macroeconomic variables of GDP, consumption, government spending, investment, exports and current account balance is explored. We look for cointegration relationships between various foreign debt variables classified as public or private foreign debt; short-term or long-term foreign debt, and various macroeconomic variables. Later, the variables studied are tested to see if there are any statistically causal relationships between them. The following results are found: short-term foreign debt is not cointegrated with any of the macroeconomic variables when long-term foreign debt is cointegrated with some of them; private foreign debt is more effective than public foreign debt on macroeconomic variables. Whilst Turkey is critically dependent on foreign borrowing in financing its current account deficit, its current account balance is not cointegrated with any of the foreign debt data. Public foreign debt precedes government spending where private foreign debt follows private sector spending. This is interpreted as a sign that the private sector is more careful with its borrowing decisions than the government since its spending, which is procyclical with the business cycle, is leading its borrowing.

‘Twin Deficits’ Hypothesis

2016 ◽  
Vol 52 (1) ◽  
pp. 15-29 ◽  
Author(s):  
Anantha Ramu M.R.
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Positive Association ◽  
Correction Method ◽  
Structural Var ◽  
Annual Data ◽  
Fiscal Deficit ◽  
Twin Deficits ◽  
Indian Economy

Higher and persistent level of fiscal deficit and current account deficit is the problem of the day for Indian economy. There exists an argument that higher fiscal deficit is the major factor behind worsening balance of payments position. However, there is no identical perception on the relationship between fiscal deficit and current account deficit both theoretically and empirically. Hence this article is a revisit to the existing debate to see whether fiscal deficit and current account deficit can be called as ‘twin deficits’ pertaining mainly to Indian economy. Using long-term annual data for the period 1980–1981 to 2012–2013 on Indian economy and using vector error correction method, this article seeks to prove that there exists long-term positive association between fiscal deficit and current account deficit, and hence can be called as ‘twins’. Using structural VAR method it has been proved here that fiscal deficit is in line with the pattern illustrated in Keynesian absorption theory and Mundell–Fleming model in regard to its impact on current account deficit. This article negates the relevance of Ricardian equivalence theory in Indian context.

scholarly journals An Analysis of the Relationship between Crude Oil Prices, Current Account Deficit and Exchange Rates: Turkish Experiment

2016 ◽  
Vol 8 (11) ◽  
pp. 48 ◽  
Author(s):  
Çagatay Basarir ◽  
Mehmet Emin Erçakar
Keyword(s):  
Exchange Rates ◽  
Crude Oil ◽  
Current Account ◽  
Current Account Deficit ◽  
Oil Prices ◽  
Crude Oil Prices ◽  
Long Run ◽  
Turkish Economy ◽  
Causality Relationship

In this study, the effect of raw oil prices and exchange rates on current account deficit of the Turkish Economy has been examined by investigating the short and long run relationship between the current account deficit of the Turkish Economy, raw oil prices (Brent oil prices) and exchange rates (USD/TRY). The Monthly Data between December 1991 and January 2016 were used in the study. The relationships between the variables were tested with the VAR (Vector Auto Regressive) Model. None of the series was found stable after the unit root tests, but it was observed that all the variables became stable when their first differences were taken. Firstly, an unrestricted VAR model was built to determine the long term relationship between the variables. After the long term relationship was found between the variables, the VECM (Vector Error Correction) Model was estimated in order to determine the short term relationship. A mutual granger causality relationship is detected between crude oil prices and current account deficit variables. No causality relationship is found between the other variables.

scholarly journals A sustainability analysis of Serbia’s current account deficit

2012 ◽  
Vol 57 (195) ◽  
pp. 139-171 ◽  
Author(s):  
Srdjan Boljanovic
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Theoretical Work ◽  
International Capital ◽  
Southeast Europe ◽  
Modified Model ◽  
Capital Movements ◽  
Current Account Sustainability ◽  
International Capital Movements

The global economic crisis have important implications for international capital movements, which further sharpens the question of the sustainability of permanent current account deficits in Southeast Europe. The goal of this paper is to analyze the medium and long-term sustainability of Serbia?s current account deficit. The first part of the paper presents a factor analysis of the sustainability of Serbia?s current account deficit. In the second part of the paper the theoretical model created by Milesi-Ferretti and Razin is used to access Serbia?s medium term current account sustainability. On the basis of Reisen?s theoretical work (Reisen methodology) and by adding net reinvested earnings from foreign direct investment to the model, a new (modified) model for assessing the long-term sustainability of a country?s current account deficit is presented. The created model was used for assessing the long-term sustainability of Serbia?s current account deficit.

scholarly journals Short and Long Term Determinants of the Net International Investment Position Resulting from the Balance of Payments of the European Monetary Union Countries

2018 ◽  
Vol 4 (336) ◽  
pp. 209-224
Author(s):  
Paweł Śliwiński
Keyword(s):  
Current Account ◽  
Euro Area ◽  
Large Scale ◽  
International Investment ◽  
Valuation Effect ◽  
Positive Balance ◽  
Short And Long Term ◽  
Net Foreign Asset ◽  
International Investment Position

The paper aims at analysing the level, composition and factors determining changes of the net international investment position (NIIP) of the euro area countries. Although the improvement in the euro area’s NIIP during the period from 2Q2012 to 2Q2016 was largely driven by current account surpluses in 13 out of 19 countries, there is a visible difference between the NIIP changes and their components in the surplus and deficit countries. The group of net foreign assets countries increased its position primarily by running current account surpluses reflecting mainly a positive balance on goods and, on a minor scale, a positive primary income balance. The NIIP in the group of net foreign liabilities countries deteriorated although the cumulative current accounts were in surplus for this period. Here, the current account improvement was largely driven by services which, in contrast to the net foreign asset countries, were in surplus. In turn, the cumulative primary income in the group of net foreign liabilities countries was in minus. Statistical analysis aimed at estimation of determinants of the changes in the NIIPs over the subsequent quarters shows that their short term behaviour was on a large scale positively driven by the changes of valuation effect resulting, for example, from exchange rates and prices movements. It should not be surprising that the signs which indicate the direction of valuation effect on the NIIP pattern are different in the short and long term. It should be stressed that the valuation effect influence decreases over time since valuation gains and losses overlap and largely neutralise each other. Nevertheless, combined losses were higher than total gains and therefore its impact on the NIIP was negative in the analysed period. On the other hand, the EMU current account surpluses were repetitive and persistent, being the main factor behind the improvement of the cumulative euro area NIIP changes.

scholarly journals The Relationship between International Oil Prices and Current Account Deficit: The Case of Turkey

2013 ◽  
Author(s):  
Mehmet Mucuk ◽  
Mustafa Gerçeker ◽  
Ahmet Ay
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Oil Prices ◽  
Energy Resources ◽  
Foreign Countries ◽  
Highly Sensitive ◽  
Johansen Cointegration ◽  
Causality Tests ◽  
The Relationship

In developing countries such as Turkey, the current account deficit, occuring due to the lack of national savings, is considered to be one of the determinants of economic crisis. At the same time owing to Turkey is dependent on foreign countries for energy resources, current account deficit is highly sensitive to fluctuations in the prices of these resources. This paper, investigates the causal relationship between international oil prices and current account deficit for Turkey using Johansen cointegration and causality tests. The empirical findings show that there is a relationship between two variables in the long term.

Sign in / Sign up

Export Citation Format

Share Document