Current account determinants in a globalized world

Mariam Camarero (), Josep Lluís Carrion-i-Silvestre () and Cecilio Tamarit
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Mariam Camarero: University Jaume I and INTECO
Josep Lluís Carrion-i-Silvestre: University of Barcelona and AQR-IREA

Empirical Economics, 2025, vol. 68, issue 4, No 1, 1497-1527

Abstract: Abstract This paper investigates the determinants of external imbalances for a group of 26 developed and emerging countries over the period 1972–2021. In addition to traditional factors, the model incorporates the impact of external imbalances in third countries. The empirical evidence highlights the importance of accounting for parameter instabilities in modeling external imbalances, with countries exhibiting heterogeneous behavior in terms of the estimated break dates. The results underscore the critical role of external drivers, such as oil shocks, and the growing influence of third-country imbalances in an increasingly globalized world. Additionally, demographic trends emerge as a significant long-run internal driver. Finally, the paper calculates regime-specific short-run multipliers.

Keywords: Current account; Global factors; Structural break; Dynamic multipliers (search for similar items in EconPapers)
JEL-codes: C32 F02 F32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-024-02686-w

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