Mean Reversion of the Current Account and Sustainability: Evidence from European Countries

Kurmaş Akdoğan

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: Stationarity of the current account is suggested as an indicator of the current account sustainability in the literature. We explore the presence of mean-reverting behaviour in current accounts of 24 European countries, using linear and nonlinear unit root tests. Our results suggest mean reversion of the current account-to-GDP ratios for almost two-thirds of the countries in our sample, hence; provide supporting evidence for the current account sustainability of these countries.

Keywords: Current account sustainability; stationarity; non-linear adjustment; non-linear models (search for similar items in EconPapers)
JEL-codes: C22 F32 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-acc and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1411

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