Resource title

Patterns of current account adjustment: insights from past experience

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Resource description

The paper examines episodes of current account adjustment in individual economies. A central finding is that these episodes are very divergent and can be usefully classified, on the basis of cluster analysis, in three groups. A majority of cases is characterised by internal adjustment, exhibiting slowing domestic demand growth. In some cases, the adjustment was mainly external, facilitated by an exchange rate depreciation but without economic slowdown. Finally, some cases involved a crisis-like combination of a severe slowdown and a significant currency depreciation. Using a multinomial logit, we find that this classification of episodes helps improve the predictability of current account adjustment.

Resource author

Bernardina Algieri, Thierry Bracke

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26074

Resource license

Adapt according to the presented license agreement and reference the original author.