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A survival analysis of sudden current account correction for Costa Rica

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  • León Murillo, Jorge
  • Méndez-Chacón, Esteban

Abstract

Using a survival model approach using data panel, an exploratory analysis is made to estimate the probability of a sudden current account correction in Costa Rica. The results show that the estimated probability of a current account reversal decreases when: i) the five years ahead real-growth increases, ii) the external situation of similar countries improves, iii) the economic dependency ratio increases, iv) the world’s GDP percentage for which the country have signed a trade agreement increases, v) reserves accumulation accelerates and vi) the institutional framework becomes more democratic. On the other hand, an increase in the total factor productivity (TFP) growth 5-year ahead raises likelihood of a reversal. The effect of capital controls on the probability showed an ambiguous behavior. Annual data from 1981 to 2012 for 116 countries is used.

Suggested Citation

  • León Murillo, Jorge & Méndez-Chacón, Esteban, 2016. "A survival analysis of sudden current account correction for Costa Rica," Revista de Ciencias Económicas, Instituto de Investigaciones en Ciencias Económicas, Universidad de Costa Rica, vol. 34(2), December.
    • Handle: RePEc:rce:rvceco:27316
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    File URL: https://revistas.ucr.ac.cr/index.php/economicas/article/view/27316
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    References listed on IDEAS

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    1. Bugamelli, Matteo & Paternò, Francesco, 2009. "Do Workers' Remittances Reduce the Probability of Current Account Reversals?," World Development, Elsevier, vol. 37(12), pages 1821-1838, December.
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    More about this item

    Keywords

    SURVIVAL MODEL; EXTERNAL BALANCE; EMERGING MARKET; MODELOS DE SUPERVIVENCIA; BALANCE EXTERNO; MERCADOS EMERGENTES;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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