What Do Current Account Reversals in OECD Countries Tell Us About the US Case?

26 Pages Posted: 30 Jan 2008

See all articles by Leo de Haan

Leo de Haan

De Nederlandsche Bank

Hubert Schokker

affiliation not provided to SSRN

Anastassia Tcherneva

affiliation not provided to SSRN

Abstract

This study examines macroeconomic developments around reversals in current account deficits in 29 OECD countries over four decades and draws some inferences for the present US deficit. Estimates of a probit model indicate that the deepness of the deficit itself, absence of spare production capacity and a beginning real depreciation are factors that increase the likelihood of a current account reversal in the following year. For the US each of these three indicators of a reversal are now on, making a near reversal probable. Over the past 40 years half of the current account deficit reversals in the OECD area were followed by a recession in the countries concerned.

Suggested Citation

de Haan, Leo and Schokker, Hubert and Tcherneva, Anastassia, What Do Current Account Reversals in OECD Countries Tell Us About the US Case?. World Economy, Vol. 31, Issue 2, pp. 286-311, February 2008. Available at SSRN: https://ssrn.com/abstract=1088536 or http://dx.doi.org/10.1111/j.1467-9701.2007.01070.x

Leo de Haan (Contact Author)

De Nederlandsche Bank ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands
+31 20 5243539 (Phone)
+31 20 5242514 (Fax)

Hubert Schokker

affiliation not provided to SSRN ( email )

Anastassia Tcherneva

affiliation not provided to SSRN

No Address Available

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