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Some Characteristics of Sharp Current Account Deficit Reversals in Transition Countries

Author

Listed:
  • Aleksander Aristovnik

    (University of Ljubljana)

  • Andrej Kumar

    (University of Ljubljana)

Abstract

This article examines current account deficit adjustments in selected transition countries in the 1990s and at the beginning of the 21st century. For this purpose we primarily investigate the main characteristics of sharp current account reversals in Albania, Armenia, Belarus, Bosnia and Herzegovina, Kyrgyz R., Lithuania, Moldova, Poland, Slovenia and Ukraine. Results suggest that restrictively defined reversals seem to be closely related to factors such as domestic savings, real export growth, international reserves and external indebtedness as well as to budget and trade balances. While the role of exchange rate depreciation seems ambiguous, we found that sharp current account reversals are systematically associated with a gradual GDP growth slowdown in the pre-reversal period and with robust GDP growth impetus afterwards.

Suggested Citation

  • Aleksander Aristovnik & Andrej Kumar, 2006. "Some Characteristics of Sharp Current Account Deficit Reversals in Transition Countries," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 4(1), pages 9-45.
    • Handle: RePEc:seb:journl:v:4:y:2006:i:1:p:9-45
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    More about this item

    Keywords

    Current account balance; reversals; macroeconomic; variables; eastern Europe; former Soviet Union;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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