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Sustainability of current account balances in small states

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  • Jeetendra Khadan
  • Amrita Deonarine

Abstract

This article applies the inter-temporal budget constraint framework and panel cointegration tests to examine the sustainability of current account deficits in 17 small states over the period 1995-2016. The findings show the existence of cointegration between real exports and real imports, but with the magnitude of the long-run coefficient being less than one, which support a “weak†form of current account sustainability in small states.

Suggested Citation

  • Jeetendra Khadan & Amrita Deonarine, 2020. "Sustainability of current account balances in small states," Economics and Business Letters, Oviedo University Press, vol. 9(1), pages 14-20.
    • Handle: RePEc:ove:journl:aid:13896
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    File URL: https://reunido.uniovi.es/index.php/EBL/article/view/13896
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