Current-Account Sustainability in Transition Economies

Roubini, Nouriel; Wachtel, Paul L.

doi:10.1007/978-0-585-31346-7_2

Cited by 51 publications

(61 citation statements)

References 13 publications

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“…The long-run increase in the economy's productive capacity (as measured by the higher stocks of public and private capital, and output) ensures that the higher debt is sustainable. This view has also been expressed by Roubini and Wachtel (1998). The dependence of the efficacy of a tied aid program on the elasticity of substitution in production in the recipient country is an important question.…”

Section: Tied Aidmentioning

confidence: 99%

Financing Public Investment through Foreign Aid: Consequences for Economic Growth and Welfare*

Chatterjee

Turnovsky

2005

Rev International Economics

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The paper develops a theoretical framework for understanding the mechanism through which foreign aid affects macroeconomic performance. The authors find that the long-run impact of an aid program and the nature of the transitional dynamics it generates depend crucially on (i) the elasticity of substitution in production, (ii) whether the aid flow is tied to investment activity or not, (iii) how the recipient government chooses to react to the flow of external assistance, and (iv) whether the aid program is permanent or temporary. Structural characteristics of the recipient are important in determining the extent to which external assistance can aid growth and welfare.

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Section: Tied Aidmentioning

confidence: 99%

Financing Public Investment through Foreign Aid: Consequences for Economic Growth and Welfare*

Chatterjee

Turnovsky

2005

Rev International Economics

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“…From a theoretical point of view, a country that runs a substantial current account deficit should generate a trade balance surplus through an increase in competitiveness by real exchange rate depreciation (Roubini andWatchel, 1998, Chinn andWei, 2008). 15 Based on this, the fact that CEE countries with more flexible exchange rate show experienced smaller current account disequilibria is a priori justified.…”

Section: Current Account and Exchange Rate Volatilitymentioning

confidence: 99%

The effect of nominal exchange rate volatility on real macroeconomic performance in the CEE countries

et al. 2011

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Décembre 2009 GATE Groupe d'Analyse et de Théorie Économique UMR 5824 du CNRS 93 chemin des Mouilles -69130 Écully -France B.P. 167 -69131 Écully Cedex Tél. +33 (0)4 72 86 60 60 -Fax +33 (0)4 72 86 60 90 Messagerie électronique gate@gate.cnrs.fr Serveur Web : www.gate.cnrs.fr Abstract This paper analyzes the relation between nominal exchange rate volatility and several macroeconomic variables, namely real per output growth, excess credit, foreign direct investment (FDI) and the current account balance, in the Central and Eastern European EU Member States. Using panel estimations for the period between 1995 and 2008, we find that lower exchange rate volatility is associated with higher growth, higher stocks of FDI, higher current account deficits, and higher excess credit. The results are economically and statistically significant, and robust. JEL: F3, F4, F5.

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“…The empirical evidence on the current account dynamics in the four chosen economies of Asia uses cointegration techniques and is based on the theoretical approach developed by Hakkio and Rush (1991) and elaborated further by Husted (1992). This approach, and/or its variants, has been used widely for testing the CA sustainability hypothesis, mostly in developed countries (for example Cashin and McDermott, 1998;Wu et al ., 2001), and more rarely in transition and developing countries (Roubini and Wachtel, 1998). Since the financial turmoil in Asia, numerous publications have focused on the fundamentals leading to the crisis by dealing essentially with the external accounts and/or the investors' panic.…”

Section: mentioning

confidence: 99%

Analysis of the Current Account Position of Four Asian Countries Before the 1997 Crisis

Andréosso-O’Callaghan

Kan

2007

Pacific Economic Review

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The current paper presents an empirical analysis of the current account positions during the pre Asian crisis period, in the four most crisis-hit countries (namely Thailand, the Philippines, South Korea and Indonesia). We have employed the procedures advocated by Husted for the presence of stationarity in current accounts by estimating a cointegration relationship between any country's exports and imports. The results do not substantiate the presence of cointegration between the series, implying that the macroeconomic fundamentals in these countries prior to the crisis were far from robust, at least from the perspective of current account sustainability. Copyright 2007 Blackwell Publishing Ltd

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Current-Account Sustainability in Transition Economies

Cited by 51 publications

References 13 publications

Financing Public Investment through Foreign Aid: Consequences for Economic Growth and Welfare*

Financing Public Investment through Foreign Aid: Consequences for Economic Growth and Welfare*

The effect of nominal exchange rate volatility on real macroeconomic performance in the CEE countries

Analysis of the Current Account Position of Four Asian Countries Before the 1997 Crisis

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