Factors driving current account performance of South Asian economies: A comparative empirical analysis

Hrushikesh Mallick

The Journal of International Trade & Economic Development, 2023, vol. 32, issue 4, 575-611

Abstract: Considering annual data from 1980 to 2020, this study attempts to investigate major factors determining Current Account Deficits (CADs) for five South Asian economies (Bangladesh, India, Pakistan, Nepal and Sri Lanka) in the South Asian Region. Using VAR estimation framework on a basic model of CAD, it is observed that exchange rate depreciation majorly helps to improve the Current Account Balances (CABs), whereas increased per capita income, trade openness, net foreign capital inflows don’t pose major threats to deterioration in their CABs of countries. While fiscal deficit doesn’t have substantial effect on CAB except for Bangladesh and Nepal, increased savings have an unfavourable effect on CAB, which is a major policy concern for almost all the countries in the region. Given the trends of liberalisation which is intensifying over time along with sustained growth of per capita incomes across economies, we conclude that unless some sectoral import restrictions are imposed along with ensuring the stability of exchange rates and productive allocation of external credits, the economies are likely to experience deterioration in their CABs and macro policy environment.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09638199.2022.2124436 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:32:y:2023:i:4:p:575-611

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

DOI: 10.1080/09638199.2022.2124436

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().