Macroeconomic and institutional determinants of current account deficits

Ozmen, E
This study empirically investigates the effects of institutional and macroeconomic policy variables on current account deficits (CAD). Based on cross-section data for a broad number of countries, the results suggest that better governance increases whilst 'original sin' decreases the ability of an economy to sustain CAD. Exchange rate flexibility and openness appear to put a discipline on CAD. Consistent with the equity home bias and Feldstein-Horioka puzzle, CAD decrease with country size. The net impacts of the financial deepening and monetary credibility on CAD are found to be insignificant.


Interest rates and monetary policy
Gazioglu, S.; McCausland, W. D. (Informa UK Limited, 2009-01-01)
This article conducts a thorough intertemporal analysis of nominal interest rate based monetary policy. Its main contribution is to show how such a policy can have different effects depending on the assumptions made about the saving and borrowing behaviour of firms. We consider two cases: (i) consumers are savers and firms are borrowers and (ii) both consumers and firms are borrowers (the nation as a whole is borrowing from abroad). In one case we confirm conventional wisdom, but in the other case we find t...
Foreign money shocks and the welfare performance of alternative monetary policy regimes
Senay, Ozge; Sutherland, Alan (Wiley, 2007-01-01)
The welfare properties of monetary policy regimes for a country subject to foreign money shocks are examined in a two-country sticky-price model. Money targeting is found to be welfare superior to a fixed exchange rate when the expenditure switching effect of exchange rate changes is relatively weak, but a fixed rate is superior when the expenditure switching effect is strong. However, price targeting is superior to both these regimes for all values of the expenditure switching effect. A welfare-maximising ...
Stochastic optimization applied to self-financing portfolio: does bequest matter?
Gazioglu, Saziye; Bastiyali-Hayfavi, Azize (Informa UK Limited, 2010-01-01)
The article studies stochastic optimization of an intertemporal consumption model to allocate financial assets between risky and risk-free assets. We use a stochastic optimization technique, in which utility is maximized subject to a self-financing portfolio constraint. The papers in literature have estimated the errors of Euler equations using data from financial markets. It has been shown that it is sufficient to test the first order Euler equation implied by the model. However, they all assume a constant...
Nonlinear models, composite longer leading indicator and forecasts for UK real GDP
Ocal, N (Informa UK Limited, 2006-05-20)
This paper examines the role of the Office for National Statistics Composite Longer Leading Indicator, in nonlinear business cycle models for growth rates of UK real gross domestic product (GDP). These models are of the smooth transition regression class, with the transition between "regimes'' expressed as functions of lagged changes in the leading indicator. In general, evidence is found of business cycle regime asymmetries, with increases and decreases in the leading indicator implying distinct responses ...
Financial development and energy consumption in emerging markets: Smooth structural shifts and causal linkages
Durusu-Ciftci, Dilek; Soytaş, Uğur; NAZLIOĞLU, ŞABAN (Elsevier BV, 2020-03-01)
This study examines the dynamic interrelationships among financial development, energy consumption, and economic growth in emerging markets by focusing on accounting for structural changes in causal linkages. We first employ the Toda-Yamamoto causality framework and then augment it with a Fourier approximation which captures structural shifts as a gradual/smooth process. The empirical findings show that taking into account gradual structural shifts matters for the causal linkages between financial developme...
Citation Formats
E. Ozmen, “Macroeconomic and institutional determinants of current account deficits,” APPLIED ECONOMICS LETTERS, pp. 557–560, 2005, Accessed: 00, 2020. [Online]. Available: