tailieunhanh - Global imbalances in current account balances

Persistent current account deficits were observed in some developing countries that are received substantial foreign capital in the last decades. This has raised the issue of sustainability and increased the volume of studies about the measures of sustainable current account deficits in the economic literature. Researchers especially concentrated on the issue that whether the deficits result with a balance of payments crisis or not. In this paper, we use Markov Switching Auto Regressive models with three regimes in 1975– 2009 periods annually for analyzing the current account balances of some developing countries; Argentina, Brazil, Mexico and Turkey. | Journal of Applied Finance Banking vol. 2 no. 6 2012 83-93 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2012 Global Imbalances in Current Account Balances Melike Bildirici1 and Fazil Kayikẹi2 Abstract Persistent current account deficits were observed in some developing countries that are received substantial foreign capital in the last decades. This has raised the issue of sustainability and increased the volume of studies about the measures of sustainable current account deficits in the economic literature. Researchers especially concentrated on the issue that whether the deficits result with a balance of payments crisis or not. In this paper we use Markov Switching Auto Regressive models with three regimes in 19752009 periods annually for analyzing the current account balances of some developing countries Argentina Brazil Mexico and Turkey. Since oil exports or imports constitute large amounts in trade balances of these countries and current account balances represent persistency in their nature we have used oil prices together with the current account balances itself in order to explain the structure of the current account balance levels of these countries. Results indicate that behavior of the current account balances differs in response to a being an oil exporter or importer which highlights the structural part of the current account balances. JEL classification numbers C22 C52 F22 Keywords Current Account Balance of Payments Oil prices Markov Switching Auto Regressive. 1 Introduction The current account balance of an economy is an important legend for its performance and has many significant roles in policymakers analyses of economic growth and development. First its importance stems from the reality that the current account balance 1Yildiz Technical University Department of Economics Istanbul. e-mail melikebildirici@ 2Yildiz Technical University Department of Economics Istanbul. e-mail fkayikci@ Article Info Received .