Robust Determinants of Current Account Imbalances in Emerging and Developing Countries

Christophe Martial Mbassi, Michel Cyrille Samba and Prince de Pierre Lakouetene

International Journal of Finance & Economics, 2025, vol. 30, issue 4, 3950-3973

Abstract: We aim to identify robust determinants of current account imbalances in 87 emerging and developing countries in the context of model uncertainty and selection bias, from 1980 to 2017. The uncertainty arises from the diversity of competing theories and the contradictory findings of empirical works, while the systemic unavailability of current account data causes selection bias. To overcome these issues, we extend Bayesian Model Averaging (BMA) approach to HeckitBMA in order to address model uncertainty in the presence of selection bias. We find that out of 21 potential determinants, only 10 are robust determinants. However, these determinants differ according to country groupings, and since the 2008 financial crisis, some determinants have gained importance, such as inflation targeting, macroprudential policies, and income inequality. Finally, we find that the determinants of current account surpluses are not strictly the same as those of deficits. Our results shed more light on how policy makers can manage current account imbalances and which levers to use.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/ijfe.3101

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:wly:ijfiec:v:30:y:2025:i:4:p:3950-3973

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().