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On the Stationarity of Current Account Deficits in the European Union

Mark Holmes (), Jesus Otero () and Theodore Panagiotidis ()

Working Paper series from Rimini Centre for Economic Analysis

Abstract: In this paper, we test for the stationarity of EU current account deficits. Our testing strategy addresses two key concerns with regard to unit root panel data testing, namely (i) the identification of which panel members are stationary, and (ii) the presence of cross-sectional dependence. For this purpose, we employ an AR-based bootstrap approach to the Hadri (2000) test. While there is only mixed evidence that current account stationarity applies when examining individual countries, this does not appear to be case when considering panels comprising both EU and non-EU members.

Keywords: Heterogeneous dynamic panels; current account stationarity; mean reversion; panel stationarity test (search for similar items in EconPapers)
JEL-codes: C33 F32 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ecm and nep-eec
Date: 2010-01
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Journal Article: On the Stationarity of Current Account Deficits in the European Union (2010) Downloads
Working Paper: On the stationarity of current account deficits in the European Union (2009) Downloads
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