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Title:Patterns of current account adjustment: insights from past experience PDF Logo
Authors:Algieri, Bernardina
Bracke, Thierry
Issue Date:2007
Series/Report no.:CESifo working paper 2029
Abstract: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.
JEL:F32
C14
C25
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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