SUSTAINABILITY OF CURRENT ACCOUNT SURPLUSES: EVIDENCE FROM EUROPEAN COUNTRIES

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SİVRİKAYA A., KURUL Z.

PRAGUE ECONOMIC PAPERS, cilt.29, sa.4, ss.481-501, 2020 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 29 Sayı: 4
  • Basım Tarihi: 2020
  • Doi Numarası: 10.18267/j.pep.733
  • Dergi Adı: PRAGUE ECONOMIC PAPERS
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, EconLit, PAIS International, Political Science Complete, Sociological abstracts, Worldwide Political Science Abstracts
  • Sayfa Sayıları: ss.481-501
  • Anahtar Kelimeler: European imbalances, current account sustainability, nonlinear unit root tests, AUTOREGRESSIVE TIME-SERIES, OIL-PRICE SHOCK, UNIT-ROOT, ASYMMETRIC ADJUSTMENT, SMOOTH TRANSITION, GREAT CRASH, IMBALANCES, DEFICITS, NONSTATIONARITY, STATIONARITY
  • Hacettepe Üniversitesi Adresli: Evet

Özet

Over the last two decades. the current accounts in the European Union (EU) have diverged substantially. This divergence has raised concerns about the sustainability of the core countries' current account surpluses since the peripheral countries' financing of their significantly rising levels of current deficits depends on them. In this study. by applying both linear and nonlinear unit root tests and taking into account structural breaks in the data-generating process, we examine the current account sustainability of the main core countries with large external surpluses. We find that the current accounts of Austria. Denmark and Germany are not on sustainable paths, which suggests that the core economies might not continue to run surpluses to finance the peripheral countries' external deficits. The results of this study imply that the policymakers in peripheral countries might take proactive measures against possible borrowing problems and capital outflow risk in the future.