A survival analysis of sudden current account correction for Costa Rica

Jorge Leon and Esteban Méndez-Chacón

Revista de Ciencias Económicas, 2016, vol. 34, issue 2

Abstract: Using a survival model approach using data panel, an exploratory analysis is made to estimate the probability of a sudden current account correction in Costa Rica. The results show that the estimated probability of a current account reversal decreases when: i) the five years ahead real-growth increases, ii) the external situation of similar countries improves, iii) the economic dependency ratio increases, iv) the world’s GDP percentage for which the country have signed a trade agreement increases, v) reserves accumulation accelerates and vi) the institutional framework becomes more democratic. On the other hand, an increase in the total factor productivity (TFP) growth 5-year ahead raises likelihood of a reversal. The effect of capital controls on the probability showed an ambiguous behavior. Annual data from 1981 to 2012 for 116 countries is used.

Keywords: SURVIVAL MODEL; EXTERNAL BALANCE; EMERGING MARKET; MODELOS DE SUPERVIVENCIA; BALANCE EXTERNO; MERCADOS EMERGENTES (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2016
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