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Is The Balancing Item For Australia Sustainable? Evidence From A Threshold Autoregressive Model With An Autoregressive Unit Root

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  • VINOD MISHRA
  • RUSSELL SMYTH
  • TUCK CHEONG TANG

Abstract

This article applies an unrestricted two‐regime threshold autoregressive (TAR) model with an autoregressive unit root to examine the sustainability of the balancing item of the balance of payments for Australia from the first quarter 1960 to the second quarter 2006. The main finding is that the balancing item of the balance of payments in Australia is characterised by a non‐linear, but stationary, series meaning that the balancing item is sustainable. This result implies that short‐run volatility in the balancing item has no effect on the reliability of reporting of the balancing item in the long‐run.

Suggested Citation

  • Vinod Mishra & Russell Smyth & Tuck Cheong Tang, 2008. "Is The Balancing Item For Australia Sustainable? Evidence From A Threshold Autoregressive Model With An Autoregressive Unit Root," Australian Economic Papers, Wiley Blackwell, vol. 47(2), pages 190-198, June.
    • Handle: RePEc:bla:ausecp:v:47:y:2008:i:2:p:190-198
    DOI: 10.1111/j.1467-8454.2008.00340.x
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    Cited by:

    1. Serkan TAŞTAN, 2015. "Sustainability of balancing item of balance of payment for OECD countries: evidence from Fourier Unit Root Tests," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(604), A), pages 93-100, Autumn.
    2. Maria Siranova & Menbere Workie Tiruneh, 2016. "The determinants of errors and omissions in a small and open economy: The case of Slovakia," Working Papers wp73, Institute of Economic Research, Slovak Academy of Sciences, revised 08 Apr 2016.
    3. Liung shi Ding & Tuck cheong Tang, 2017. "‘Net Errors and Omissions' of Balance of Payments and Its Sustainability: A Survey of Literature," Economics Bulletin, AccessEcon, vol. 37(4), pages 2753-2766.
    4. Siranova, Maria & Tiruneh, Menbere Workie & Fisera, Boris, 2021. "Creating the illicit capital flows network in Europe – Do the net errors and omissions follow an economic pattern?," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 955-973.
    5. repec:agr:journl:v:3(604):y:2015:i:3(604):p:93-100 is not listed on IDEAS
    6. Mei-yin Lin & Hui-hua Wang, 2009. "What Causes the Volatility of the Balancing Item?," Economics Bulletin, AccessEcon, vol. 29(4), pages 2738-2748.
    7. Tuck Cheong Tang & Evan Lau, 2008. "An Empirical Investigation On The Sustainability Of Balancing Item Of Balance Of Payment Accounts For Oic Member Countries," Monash Economics Working Papers 31/08, Monash University, Department of Economics.

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