Determinants of current account deficits in industrialized and developing coıuntries: an empirical investigation

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2005

Author

Kaya Bahçe, Seçil Aysed

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This study aims to analyze the determinants of the current account deficits for a broad samples of industrial and developing countries for the period 1984-2001. Using a dynamic panel data estimation procedure, we try to unfold the impact of several macro economic and institutional variables on current account deficits. In this context, we also examine the validity of Feldstein Horioka puzzle and its relevance to the current account imbalances. Results show that better governance, a more sophisticated financial system, relatively larger country size and deterioration in the terms of trade are associated with higher current account deficits. On the other hand, exchange rate regime flexibility, openness to foreign trade and depreciation of the real exchange rate lead to smaller current account deficits. We also find that the saving investment relationship is still considerably high both in the short run and in the long run.

Subject Keywords

Economics.

URI

http://etd.lib.metu.edu.tr/upload/2/12606407/index.pdf
https://hdl.handle.net/11511/15793

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Graduate School of Social Sciences, Thesis

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Citation Formats

S. A. Kaya Bahçe, “Determinants of current account deficits in industrialized and developing coıuntries: an empirical investigation,” Ph.D. - Doctoral Program, Middle East Technical University, 2005.