Current Account Sustainability: A Non-linear Comparative Empirical Overview

Pelin Varol İyidoğan () and Taner Turan

Panoeconomicus, 2018, vol. 65, issue 4, 395-410

Abstract: This study aims to examine the sustainability of current account deficits for Hungary, Poland, Czech Republic and Turkey over the period 1998Q1:2014:2, with a special attention to the Turkish case, by applying the theoretical model of Steven Husted (1992). The main motive for the choice of time span is that the period comprises the outcomes of two important crises Turkish economy experienced in 2001 and 2008. The empirical testing procedure of the sustainability is two-fold so as to be linear and nonlinear. Both linear and nonlinear test results provide evidence that the current account deficit is unsustainable for Turkey, Poland and Czech Republic. On the other hand, linear and nonlinear test results lead to a conflicting evidence for Hungary. We conclude that there is a need to reduce the current account deficit for the countries examined. Otherwise, a sharp adjustment may be inevitable. Key words: current account, sustainability, co-integration, nonlinearity. JEL: C32, F32. Održivost tekućeg računa: Nelinearni komparativni empirijski pregled Rad ima za cilj da ispita održivost deficita tekućeg računa za Mađarsku, Poljsku, Češku Republiku i Tursku tokom perioda 1998Q1: 2014Q2, sa posebnom pažnjom na slučaj Turske, primenom teorijskog modela Stevena Husteda (1992). Glavni motiv za izbor vremenskog perioda je da period obuhvata rezultate dve važne krize turske privrede koje su se desile 2001. i 2008. godine. Postupak empirijskog testiranja održivosti je dvostruko, linearni i nelinearni. Rezultati linearnog i nelinearnog testa pokazuju da je deficit tekućeg računa Turske, Poljske i Češke neodrživ. Sa druge strane, rezultati linearnih i nelinearnih testova dovode do konfliktnih dokaza za Mađarsku. Zaključujemo da postoji potreba da se smanji deficit tekućeg računa za ispitane zemlje. U suprotnom, oštro podešavanje može biti neizbežno. Ključne reči: Tekući račun, održivost, kointegracija, nelinearnost.

Keywords: current account; sustainability; co-integration; nonlinearity (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://panoeconomicus.org/index.php/jorunal/article/view/496/488 (application/pdf)

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:voj:journl:v:65:y:2018:i:4:p:395-410:id:496

Access Statistics for this article

Panoeconomicus is currently edited by Kosta Josifidis

More articles in Panoeconomicus from Savez ekonomista Vojvodine, Novi Sad, Serbia
Bibliographic data for series maintained by Savez ekonomista Vojvodine, Novi Sad, Serbia ().