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Sustainability of the Current Account: Evidence from Pakistan

Author

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  • Shabbir Ahmad

    (Department of Finance, College of Business, Effat University, Jeddah, KSA.)

Abstract

This study examines the sustainability of the current account deficit using Pakistani data over the period 1974-2007. Employing the intertemporal budget constraint model and using autoregressive distributed lag bound testing approach, it is concluded that there is a long-run relationship between real exports and imports. However, the hypothesis of one to one relationship between the two variables does not hold in its strong form. This highlights the need for better policies to improve the current account balance in the long-run

Suggested Citation

  • Shabbir Ahmad, 2017. "Sustainability of the Current Account: Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 68-72.
    • Handle: RePEc:eco:journ1:2017-02-09
    as

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    References listed on IDEAS

    as
    1. Mohsen Bahmani-Oskooee & Hyun-Jae Rhee, 1997. "Are Imports and Exports of Korea Cointegrated?," International Economic Journal, Taylor & Francis Journals, vol. 11(1), pages 109-114.
    2. Arize, Augustine C., 2002. "Imports and exports in 50 countries: Tests of cointegration and structural breaks," International Review of Economics & Finance, Elsevier, vol. 11(1), pages 101-115, April.
    3. Shabbir Ahmad & Abul Shamsuddin & Malcolm Treadgold, 2012. "A monetary analysis of foreign exchange market disequilibrium in Fiji," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 5(1), pages 66-81.
    4. Shabbir Ahmad, 2010. "The long‐run Fisher effect in developing economies," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 27(4), pages 268-275, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Intertemporal Budget Constraint; Current Account Deficit; Cointegration; Autoregressive Distributed Lag; Bound Testing;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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