On the Stationarity of Current Account Deficits in the European Union

11 Pages Posted: 10 Aug 2010

See all articles by Mark J. Holmes

Mark J. Holmes

University of Waikato - Management School, Department of Economics

Jesús Otero

Independent

Theodore Panagiotidis

University of Macedonia - Department of Economics

Abstract

In this paper, we test for the stationarity of EU current account deficits. Our testing strategy addresses two key concerns with regard to unit-root panel data testing, namely (i) the identification of which panel members are stationary, and (ii) the presence of cross-sectional dependence. For this purpose, we employ an AR-based bootstrap approach to the Hadri (2000) test. While there is only mixed evidence that current account stationarity applies when examining individual countries, this does not appear to be the case when considering panels comprising both EU and non-EU members.

Suggested Citation

Holmes, Mark J. and Otero, Jesús and Panagiotidis, Theodore, On the Stationarity of Current Account Deficits in the European Union. Review of International Economics, Vol. 18, No. 4, pp. 730-740, September 2010, Available at SSRN: https://ssrn.com/abstract=1654659 or http://dx.doi.org/10.1111/j.1467-9396.2010.00896.x

Mark J. Holmes (Contact Author)

University of Waikato - Management School, Department of Economics ( email )

Hamilton
New Zealand

Jesús Otero

Independent

No Address Available
United States

Theodore Panagiotidis

University of Macedonia - Department of Economics ( email )

Thessaloniki, 54006
Greece

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