Sustainability of the Current Account: Evidence from Pakistan

Shabbir Ahmad
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Shabbir Ahmad: Department of Finance, College of Business, Effat University, Jeddah, KSA.

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 2, 68-72

Abstract: This study examines the sustainability of the current account deficit using Pakistani data over the period 1974-2007. Employing the intertemporal budget constraint model and using autoregressive distributed lag bound testing approach, it is concluded that there is a long-run relationship between real exports and imports. However, the hypothesis of one to one relationship between the two variables does not hold in its strong form. This highlights the need for better policies to improve the current account balance in the long-run

Keywords: Intertemporal Budget Constraint; Current Account Deficit; Cointegration; Autoregressive Distributed Lag; Bound Testing (search for similar items in EconPapers)
JEL-codes: F30 F32 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-02-09

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