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Sustainability of current account balances in small states

Jeetendra Khadan and Amrita Deonarine

Economics and Business Letters, 2020, vol. 9, issue 1, 14-20

Abstract: This article applies the inter-temporal budget constraint framework and panel cointegration tests to examine the sustainability of current account deficits in 17 small states over the period 1995-2016. The findings show the existence of cointegration between real exports and real imports, but with the magnitude of the long-run coefficient being less than one, which support a “weak†form of current account sustainability in small states.

Date: 2020
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