International Intertemporal Solvency in OECD Countries: Evidence From Panel Unit Root
MPRA Paper from University Library of Munich, Germany
The purpose of this study is to investigate the sustainability of current account of 22 OECD countries by employing Liu and Tanner (1996) testing procedure. The procedure used here is to examine stationarity of current account. Using ADF unit root test on single time series, it is found that current account of most OECD countries have unit root. This outcome, however, might be due to the generally low power of this test. The aim of this paper is to reconsider this issue by exploiting the extra information provided by the combination of the time-series and cross-sectional data and the subsequent power advantages of panel data unit root tests. We apply the test advocated by Im, Pesaran and Shin (1997). According to estimation results current account deficits in OECD countries are sustainable.
Keywords: panel data unit-root test; current account; solvency (search for similar items in EconPapers)
JEL-codes: C23 F30 F32 (search for similar items in EconPapers)
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Published in Praque Economic Papers 15.1(2006): pp. 44-49
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Journal Article: International Intertemporal Solvency in OECD Countries: Evidence from Panel Unit Root (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:855
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