Current Account Imbalances in AsEAN Countries: Are they a Problem?

Jonathan Ostry

No 1997/051, IMF Working Papers from International Monetary Fund

Abstract: Applying a consumption-smoothing model to five ASEAN countries reveals that excessive private consumption has not tended to characterize their widening external imbalances in recent years, except to a small degree in Indonesia and Malaysia. Beyond consumption smoothing, however, a number of factors influence the desirability of running large external deficits, including the level and composition of external liabilities, the flexibility of macroeconomic policies, and the health of banking systems. Even when the current account deficit appears sustainable, there is a case to reduce them in order to lower the risks arising from such factors.

Keywords: WP; current account deficit; fiscal policy; debt ratio; financial system; current account balance; current account position; consumption-smoothing model; current account sustainability; GDP deflator; current account behavior; positions in a number of ASEAN country; current account positions of a number of ASEAN country; current account imbalances in AsEAN country; widening deficit; imbalances in AsEAN country; Current account; Current account deficits; Consumption; Current account balance; Consumption distribution (search for similar items in EconPapers)
Pages: 31
Date: 1997-04-01
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Citations: View citations in EconPapers (23)

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