Reviewing the sustainability/stationarity of current account imbalances with tests for bounded integration

Helmut Herwartz and Fang Xu

No 2006-07, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

Abstract: We investigate for 26 OECD economies if their current account imbalances are driven by stochastic trends. Standard ADF results are contrasted with tests accounting for the bounded support of the current account. Neglecting the latter feature might give misleading results in the sense that ADF based conclusions are biased towards the rejection of unit root features. The current account imbalances are found to be bounded nonstationary for most OECD economies. Panel based test statistics confirm the bounded nonstationarity for these series.

Keywords: Current account; bounded unit root tests (search for similar items in EconPapers)
JEL-codes: C12 C22 C23 E21 E22 F32 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ets and nep-mac
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: REVIEWING THE SUSTAINABILITY/STATIONARITY OF CURRENT ACCOUNT IMBALANCES WITH TESTS FOR BOUNDED INTEGRATION* (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:4351

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