Determinants and Costs of Current Account Reversals under Heterogeneity and Serial Correlation

Arbeitspapier

Recent empirical evidence suggests that reversing current account balances imply costly adjustment processes leading to reduced economic growth. Using large panel data sets to analyze determinants and costs of reversals asks for controls of heterogeneity among countries. This paper contributes a Bayesian analysis, which allows a parsimonious yet flexible handling of country specific heterogeneity via random coeffcients. Furthermore, the analysis allows for serially correlated errors in order to capture persistence within the employed macroeconomic data. Bayesian specification tests provide evidence in favor of models incorporating heterogeneity and serial correlation. The results suggest that consideration of serial correlation and heterogeneity is necessary to assess correctly the determinants and costs of reversals. Results are checked for robustness against the underlying reversal definition.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper ; No. 2007-17

Classification and Topics

• Classification: Wirtschaft ; Current Account Adjustment; Short-term Capital Movements ; Economic Growth of Open Economies ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions ; Multiple or Simultaneous Equation Models; Multiple Variables: General
• Subject: Current account reversals ; Bayesian Analysis ; Panel Probit Model ; Panel Treatment Model ; Random Parameters ; Serial Correlation ; Leistungsbilanz ; Zahlungsbilanzungleichgewicht ; Anpassungskosten ; Bayes-Statistik ; Schätztheorie ; Probit-Modell ; Schätzung ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aßmann, Christian
• Event: Veröffentlichung
• (who): Kiel University, Department of Economics
• (where): Kiel
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/22033
• Last update: 10.03.2025, 11:43 AM CET