Sustainability of current account deficits in India: an intertemporal perspective

Singh, Tarlok

doi:10.1080/00036846.2015.1039701

Cited by 9 publications

(12 citation statements)

References 47 publications

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“…The results revealed the difference in the adjustments of current account sustainability followed by positive and negative shocks. Singh (2015) used an optimal single-equation system and maximum-likelihood method as an estimator. The obtained estimates on annual data for the period of 1950-2010 provided empirical evidence to support the existence of a long-run relationship between imports and exports in India.…”

Section: Theoretical Background and Brief Related Literature Overviewmentioning

confidence: 99%

Asymmetric and nonlinear dynamics in trade flows sustainability: Serbia and Romania

Bošnjak

2021

AOecon

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The research examines the sustainability of trade flows for two European post-communist economies: Serbia and Romania. We analysed two nonlinear forms of the relationship between exports and imports that cannot be explained by frequently applied linear model specifications. Newly developed nonlinear autoregressive distributed lag approach revealed the asymmetric and nonlinear long-run equilibrium between Serbian exports and imports. Nonlinearity tests indicated and the SETAR model specification confirmed threshold nonlinearity form in the Serbian trade flows pattern. Serbian trade flows still approach its sustainable equilibrium but the development pattern is promising. The results for Romania revealed another nonlinear form of the relationship between exports and imports, indicating a dependent cointegration. The paper provides robust results and supports the hypothesis that the relationship between exports and imports can be nonlinear and symmetric.

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Section: Theoretical Background and Brief Related Literature Overviewmentioning

confidence: 99%

Asymmetric and nonlinear dynamics in trade flows sustainability: Serbia and Romania

Bošnjak

2021

AOecon

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“…Murat et al (2014) found the same as the previous study. Singh (2015) pointed out that India satisfied the constraint for the long length sample. Dugler (2016) presented the results which indicate that for all countries the stability tests reject the null of coefficient stability of the long-run relationship between exports and imports, and that cointegration tests imply weak form of sustainability.…”

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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“…Husted (1992) built the intertemporal solvency condition for a nation on the basis of a mean reverting current account imbalances and a long-run equilibrium relationship between exports and imports. Several studies examine the solvency test by assessing the cointegration relationships between exports and imports of developed nations (see, Leachman and Thorpe 1998;Liu and Tanner 1996;Önel and Utkulu 2006;Singh 2019;Wickens and Uctum 1993); and emerging and transition nations (see, Hassan et al (2016) for Middle East and African (MEA) countries; Wadud et al (2015) for Bangladesh; Singh (2015) for India; Gnimassoun and Coulibaly (2014) for Sub-Saharan Africa; Holmes et al (2011) for India; Greenidge et al (2011) for Barbados; Pattichis (2010) for Cyprus; Yol (2009) for Tunisia and Egypt and for Morocco; Ismail and Baharumshah (2008) for Malaysia; for 22 least developed countries; Narayan and Narayan (2004) for Fiji and Papua New Guinea; and Baharumshah et al (2003) for four ASEAN nations).…”

Section: Introductionmentioning

confidence: 99%

“…We found that only a few studies allow for structural breaks for solvency tests (see Baharumshah et al (2003) for four ASEAN countries; Önel and Utkulu (2006) for Turkey, Singh (2015) for India; Singh (2019) for OECD countries). Singh (2019), which is one of the latest studies, tested the solvency condition with data leading up to 2006, and found support for current account sustainability in the presence of structural breaks.…”

Section: Introductionmentioning

confidence: 99%

Are the Current Account Imbalances on a Sustainable Path?

Narayan

Sriananthakumar

2020

JRFM

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This paper examines the current accounts of 16 developed and developing countries over the period 1970 to 2018. We test whether these nations satisfy their intertemporal solvency condition for external imbalances. The solvency condition in the strong form entails: (1) a cointegration, or a long run equilibrium, relationship between exports and imports of goods and services; and (2) an increase in imports leading to a proportional increase in exports. Our findings imply that the external imbalances are a cause of vulnerability for several nations. Bangladesh satisfies the abovementioned solvency condition—in other words, its current account is sustainable in the strong form. Australia, Ecuador, Honduras, Mexico, New Zealand, and Venezuela show weak forms of sustainability. For these six nations, the presence of a cointegration relationship between exports and imports coincides with less than proportional increases in exports with increases in imports. The current accounts of Chile and Paraguay are unsustainable—while their exports and imports are cointegrated, a growth in imports leads to a more than proportional increase in exports. For a few nations that failed the full sample (1970–2018) cointegration test, we developed sub-samples by anchoring the start date at 1970 and increasing the sample by every five years from 1999 to 2014. From the sub-samples, we find evidence of intermittent, but weak, cases of sustainability for Peru and South Africa. We show that Panama’s current account became unsustainable after 2009. China’s current account satisfied the strong form of sustainability between all sub-samples until 2014 and became unsustainable in the most recent four years (2015–2018). France, the Philippines, and the United States unequivocally failed the intertemporal solvency test in the full sample and sub-sample analyses. The cointegration tests allow for structural breaks in exports and imports. We find these breaks have strong economic significance. For instance, we find that for most countries the structural break in exports coincides with their worst economic recession.

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Sustainability of current account deficits in India: an intertemporal perspective

Cited by 9 publications

References 47 publications

Asymmetric and nonlinear dynamics in trade flows sustainability: Serbia and Romania

Asymmetric and nonlinear dynamics in trade flows sustainability: Serbia and Romania

Untitled

Are the Current Account Imbalances on a Sustainable Path?

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