Does the Current Account Matter?

Sebastian Edwards

No 8275, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The purpose of this paper is to investigate in detail the behavior of the current account in emerging economies, and in particular its role if any in financial crises. Models of current account behavior are reviewed, and a dynamic model of current account sustainability is developed. The empirical analysis is based on a massive data set that covers over 120 countries during more than 25 years. Important controversies related to the current account including the extent to which current account deficits help predict currency crises are also analyzed. Throughout the paper I am interested in analyzing whether there is evidence supporting the idea that there are costs involved in running 'very large' deficits. Moreover, I investigate the nature of these potential costs, including whether they are particularly high in the presence of other type of imbalances.

JEL-codes: F3 F32 (search for similar items in EconPapers)
Date: 2001-05
Note: IFM ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (95)

Published as Edwards, Sebastian. "Thirty Years Of Current Account Imbalances, Current Account Reversals And Sudden Stops," International Monetary Fund Staff Papers, 2004, v51(4), 1-49.
Published as Does the Current Account Matter? , Sebastian Edwards. in Preventing Currency Crises in Emerging Markets , Edwards and Frankel. 2002

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