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Are Australia's Current Account Deficits Excessive?

Paul Cashin () and Christopher McDermott ()

The Economic Record, 1998, vol. 74, issue 227, 346-61

Abstract: This paper compares the evolution of the Australian current account balance over the period 1954-94 against an optimal current account derived from a consumption-smoothing model. The findings indicate that the Australian current account was not used to smooth consumption optimally in the period prior to the relaxation of capital controls in the early 1980s. The results also suggest that, in the period since the mid-1980s, Australia's current account deficits have become excessive and that the increase in net national saving required to satisfy its external borrowing constraint is about 2 to 4 percent of GDP. Copyright 1998 by The Economic Society of Australia.

Date: 1998
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Working Paper: Are Australia's Current Account Deficits Excessive? (1996) Downloads
Working Paper: Are Australia's Current Account deficits Excessive? (1996)
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