CURRENT ACCOUNT SUSTAINABILITY IN SELECTED TRANSITION COUNTRIES

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dc.contributor.author Aristovnik, Aleksander en_US
dc.date.accessioned 2007-10-25T20:12:38Z
dc.date.available 2007-10-25T20:12:38Z
dc.date.issued 2006-11-01 en_US
dc.identifier.other RePEc:wdi:papers:2006-844 en_US
dc.identifier.uri http://hdl.handle.net/2027.42/57224 en_US
dc.description.abstract The article examines the question of whether the current account deficits seen in selected transition economies in recent years mainly as a symptom of the dynamic economic activity of the catching-up process are a source of potential macroeconomic destabilisation. Given the possible significant reduction of capital flows, as well as restrictions and lessons from recent financial crises, current account deficits must be closely monitored in the region. In this respect, the issue of 'current account sustainability’ in seventeen transition economies is investigated. For this purpose, two accounting frameworks (Milesi-Ferreti and Razin, 1996; Reisen, 1998) based on certain strict assumptions are employed. The results show that if the observed level of foreign direct investment (FDI) flows is kept in the medium run almost all countries could optimally have a higher level of external deficit, with the exception of countries such as Baltic States, Hungary, Macedonia, Moldova and Romania. Accordingly, the maintenance of relatively large FDI inflows (especially greenfield investments) to national economies is a key priority in securing future external sustainability. In the end, the results indicate that current account deficits of transition economies that exceed 5 percent of GDP generally involve problems of their external sustainability. en_US
dc.format.extent 322049 bytes
dc.format.extent 1802 bytes
dc.format.mimetype application/pdf
dc.format.mimetype text/plain
dc.relation.ispartofseries 844 en_US
dc.subject Transition Economies, Current Account Deficits, Sustainability, FDI en_US
dc.subject.other C33, F32 en_US
dc.title CURRENT ACCOUNT SUSTAINABILITY IN SELECTED TRANSITION COUNTRIES en_US
dc.type Working Paper en_US
dc.subject.hlbsecondlevel Economics en_US
dc.subject.hlbtoplevel Business en_US
dc.contributor.affiliationum William Davidson Institute en_US
dc.description.bitstreamurl http://deepblue.lib.umich.edu/bitstream/2027.42/57224/1/wp844 .pdf en_US
dc.owningcollname William Davidson Institute (WDI) - Working Papers
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