## The External Balance Assessment Methodology: 2018 Update

_IMF Working Papers, March 19, 2019_

## Source details

**Canonical URL:** [The External Balance Assessment Methodology: 2018 Update](https://www.imf.org/en/publications/wp/issues/2019/03/19/the-external-balance-assessment-methodology-2018-update-46643)

## Other formats

- [Markdown version](/en/publications/wp/issues/2019/03/19/the-external-balance-assessment-methodology-2018-update-46643/index.md)
- [Structured JSON version](/en/publications/wp/issues/2019/03/19/the-external-balance-assessment-methodology-2018-update-46643/index.json)
- [Bundle manifest](/en/publications/wp/issues/2019/03/19/the-external-balance-assessment-methodology-2018-update-46643/bundle-manifest.json)

## Bibliographic details
- Authors: Luis M. Cubeddu, Signe Krogstrup, Gustavo Adler, Pau Rabanal, Mai Dao, Swarnali A Hannan, Luciana Juvenal, Cyril Rebillard, Daniel Garcia-Macia, Callum Jones, Jair Rodriguez, Kyun Suk Chang, Deepali Gautam, Zijiao Wang, Nan Li
- Published: March 19, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498300933.001

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### Overview and scope
- Presents the updated External Balance Assessment (EBA) framework, a key input in the conduct of multilaterally-consistent external sector assessments of 49 advanced and emerging market economies.
- Builds on the framework introduced in 2012 and two subsequent rounds of refinements (as described in Phillips et al., 2013).
- Introduces new complementary tools to:
  - Shed light on the role of structural factors in explaining external imbalances.
  - Assess potential biases in the measurement of external positions.
- Discusses remaining challenges and areas of future work.

### Key substantive findings and contributions
- The EBA framework remains central to the IMF’s assessment of external positions and exchange rates.
- The update provides:
  - A multilaterally-consistent methodology applied across 49 advanced and emerging market economies.
  - New tools focused on structural-factor explanations of external imbalances.
  - Diagnostics for potential measurement biases in external-position indicators.

### Subjects and keywords (as listed)
- Subjects:
  - Balance of payments
  - Capital controls
  - Current account
  - Current account balance
  - External balance assessment (EBA)
  - External position
  - Foreign exchange
  - Real effective exchange rates
- Keywords:
  - capital control
  - capital control index
  - Capital controls
  - current account
  - Current account balance
  - current account gap
  - current account level
  - current account model
  - EBA current account balance assessment
  - EBA current account model
  - exchange rate
  - exchange rates
  - External balance assessment (EBA)
  - external sustainability
  - foreign exchange
  - Global
  - global imbalances
  - model residual
  - potential GDP
  - Real effective exchange rates
  - reer-index model
  - REER-Index model
  - WP

### Summary of purpose and next steps emphasized
- Purpose:
  - Provide an updated, multilaterally-consistent EBA framework to assess external positions and exchange rates across a broad set of economies.
  - Enhance understanding of structural drivers of external imbalances and measurement biases.
- Next steps / remaining work (as discussed in the paper):
  - Addressing remaining challenges in the measurement and interpretation of external positions.
  - Further refinements to tools that link structural factors to external imbalances.

*IMF Working Papers: "The External Balance Assessment Methodology: 2018 Update", March 19, 2019.*

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2019/03/19/the-external-balance-assessment-methodology-2018-update-46643_