Current Account Deficits in the Transition Economies

Holmes, Mark J.

doi:10.18267/j.pep.247

Cited by 5 publications

(7 citation statements)

References 26 publications

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“…In general it is found that, although the degree of persistence varies from country to country, with the exception of Hungary and Romania there is no statistical evidence indicating a potential problem of current account sustainability in this group of CEECs investigated. This result contrasts with previous studies on industrialized economies (for example, Cunado et al ., ) and complements those of Holmes (). The macroeconomic adjustments performed during the last decades by this group of countries, from communism to market economies in order to prepare for EU membership, have helped to control external debt.…”

Section: Empirical Evidencesupporting

confidence: 63%

“…There is a much smaller literature on the analysis of current account sustainability for recently emerged economies than for industrial economies (Holmes, ). For CEECs, Holmes () finds evidence of current account sustainability for some by means of applying (linear) unit root tests to panel data, in contrast to the general findings of studies looking at industrialized countries (Holmes, ; Stein, ; Christopoulos and León‐Ledesma, ; Cunado et al ., ).…”

Section: Introductionmentioning

confidence: 99%

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The Current Account Sustainability of European Transition Economies

Cuestas

2012

J of Common Market Studies

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This article presents an analysis of the sustainability of the current accounts of a group of central and eastern European countries. Given the link between national savings (public and private) and investment, the current account may yield instabilities in fundamental macroeconomic variables. Hence, this analysis is of paramount importance given the 2008-11 debt crises faced by many European economies, and the addition of new countries to the economic and monetary union. By means of unit root tests and fractional integration it is shown that, in general, the ratio of the current account to gross domestic product is a stationary and mean reverting process. However, in some cases, shocks tend to have long-lasting effects, implying that there is no evidence of a potential debt default in this group of countries.

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Section: Empirical Evidencesupporting

confidence: 63%

Section: Introductionmentioning

confidence: 99%

The Current Account Sustainability of European Transition Economies

Cuestas

2012

J of Common Market Studies

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“…Baharumshah et al (2003) concluded that in Indonesia, Malaysia, the Philippines and Thailand the constraint is not satisfied for the period of 1961-1999. Holmes (2004) tests the stationarity and sustainability of CA deficits for ten transition economies. His results suggested that over half of the sample (the Czech Republic, Estonia, Hungary, Poland, Romania and the Slovak Republic), are characterized by CA sustainability where the impact of a CA shock on external debt will be shortrather than long-run.…”

Section: Literature Reviewmentioning

confidence: 99%

Untitled

2018

Zb. rad. Ekon. fak. Rij.

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We examined the hypothesis of current account sustainability in Czech Republic, Hungary, Poland and Serbia. Our motivation for the research study has grown from the deficiency of similar kind of studies for these countries in the observed period. This is important because of the investigation of recent global crisis consequences. The backbone for the research can be found in Hakkio and Rush (1991) and Husted (1992). However, we employed different methodological tools with a purpose to include the possibility of structural breaks. The crucial idea is to empirically test current account sustainability through the concept of cointegration between export and import. In the last decades, substantial progress has been made in econometric modeling, which has shown that conclusions derived from standard tests can be inadequate in the presence of structural breaks. We want to check this hypothesis by application of new approaches. Unit root tests were applied on observed variables. After that, Gregory-Hansen approach was employed with purpose of cointegration presence testing. Finally, we estimated cointegration vectors. The main finding of the research study is that there is some *

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“…The research question of this paper asks whether the current accounts of a group of transition countries from Central and Eastern Europe (CEECs) have become more or less sustainable since the Great Recession started. Related to this question, Holmes (2004) and analysed the current account sustainability of these countries using tests for the order of integration of the variables to account for fractional integration and nonlinearities. It has become popular in the empirical analysis to use unit root tests and other tests for the order of integration of the current account because if shocks have permanent effects, like unit root processes do, the variable will not revert to the equilibrium after a shock, and so policy action will be needed to counteract the effects of the initial shock.…”

Section: Introductionmentioning

confidence: 99%

Current account sustainability in Central and Eastern Europe: structural change and crisis

Cuestas

Monfort

2020

Empirica

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In this paper we analyse the evolution of the current account as a percentage of GDP for a group of Central and Eastern European Countries. Instead of analysing only the variable for unit roots, we go a step further and test for different speeds of mean reversion dependent on break dates endogenously determined. We apply the Bai and Perron method to find that most countries have managed to balance their current account, but some of them should keep an eye on the low speed of mean reversion and the deviation of the time trend from balance.

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Current Account Deficits in the Transition Economies

Cited by 5 publications

References 26 publications

The Current Account Sustainability of European Transition Economies

The Current Account Sustainability of European Transition Economies

Untitled

Current account sustainability in Central and Eastern Europe: structural change and crisis

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