The External Balance Assessment Methodology: 2018 Update

Abstract

The assessment of external positions and exchange rates is a key mandate of the IMF. This paperpresents the updated External Balance Assessment (EBA) framework-a key input in the conduct ofmultilaterally-consistent external sector assessments of 49 advanced and emerging marketeconomies-following the two rounds of refinements adopted since the framework was introduced in2012 (as described in Phillips et al., 2013). It also presents new complementary tools for shedding lighton the role of structural factors in explaining external imbalances and assessing potential biases in themeasurement of external positions. Remaining challenges and areas of future work are also discussed.

Keywords: External sector, Current account balances, Terms of trade, Current account surpluses, Current account deficits, current account, exchange rates, external sustainability, global imbalances., Eba, capital control, output gap, institutional quality, OAD

JEL Classification: F21, F30, F31, F41, F42, G15, G18, F32, O16, O24,