Current Account Imbalances: Can Structural Policies Make a Difference?

 
Author/Editor: Ivanova, Anna
 
Publication Date: February 01, 2012
 
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Summary: The discussion of global and regional imbalances has put the spotlight on the possible link between current accounts and structural policies. Drawing on standard empirical current account models, the paper finds that the commonly recommended structural factors cannot explain the widening of imbalances prior to the 2008 - 09 crisis. That said, structural factors do help explain some part of long-standing cross-country differences in the current account levels. In particular, countries with stricter credit market regulation, higher taxes on businesses, lower minimum wage (in particular,in slow growing economies) and generous unemployment benefits tend to have higher current account balances than others.
 
Series: Working Paper No. 12/61
Subject(s): Cross country analysis | Current account balances | Economic models | Fiscal policy | Monetary policy

Author's Keyword(s): Current account | structural policies | imbalances
 
English
Publication Date: February 01, 2012
Format: Paper
Stock No: WPIEA2012061 Pages: 34
Price:
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