Current Account Imbalances: Can Structural Policies Make a Difference?
IMF Working Papers, February 1, 2012
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- Canonical URL
- Current Account Imbalances: Can Structural Policies Make a Difference?
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Bibliographic details
- Authors: Anna Ivanova
- Published: February 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463937799.001
Summary
- The paper examines the 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.
- Structural factors do help explain some part of long-standing cross-country differences in current account levels.
Key findings
- Countries with stricter credit market regulation tend to have higher current account balances than others.
- Higher taxes on businesses are associated with higher current account balances.
- Lower minimum wage (in particular, in slow growing economies) is associated with higher current account balances.
- Generous unemployment benefits tend to be associated with higher current account balances.
Methodology (as described)
- Analysis is based on standard empirical current account models.
Subjects and keywords
- Subjects: Balance of payments, Current account, Current account balance, Current account surpluses, Employment protection, Labor, Macrostructural analysis, Structural policies
- Keywords: credit market, credit market regulation index, Current account, Current account balance, current account reduction, current account regression, current account surplus, Current account surpluses, current account to GDP, Employment protection, employment protection index, Global, imbalances, OECD country, OECD employment protection index, OECD sample, product market regulation, protection index, replacement ratio, structural policies, WP