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Current account dynamics and capital mobility in the newly industrialized countries

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  • Smruti Ranjan Behera

Abstract

This paper examines the current account dynamics in a group of ten newly industrialized countries (NICs) during the period 1980--2012 using a panel error-correction model. The model is also used to empirically test whether the degree of capital mobility is positively related to financial openness. The Chin-Ito (2006, 2008) financial openness index is used to classify the countries into different groups, and we place the countries in one group that are similar to each other in terms of their financial openness. Furthermore, to evaluate the extent of capital mobility over the different period from 1980 to 2012, the total period under study is divided into three sub-periods. The estimation results indicate that there exist long-run equilibrium relationships between domestic saving, investment, and current account in all groups regardless of their degree of financial openness. We find that more openness in terms of the capital account is associated with a higher degree of capital mobility in the case of NICs. The empirical result also indicates that the degree of capital mobility is higher in the first and third sub-period.

Suggested Citation

  • Smruti Ranjan Behera, 2016. "Current account dynamics and capital mobility in the newly industrialized countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 441-461, July.
    • Handle: RePEc:taf:irapec:v:30:y:2016:i:4:p:441-461
    DOI: 10.1080/02692171.2015.1122744
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    Cited by:

    1. Lingaraj Mallick & Smruti Ranjan Behera & Mita Bhattacharya, 2024. "Impact of Exchange Rate on Trade Balance of India: Evidence from Threshold Cointegration with Asymmetric Error Correction Approach," Foreign Trade Review, , vol. 59(2), pages 279-308, May.
    2. ARIÇ Kıvanç Halil & SEK Siok Kun & de SOUSA Miguel Rocha, 2021. "Current Account Balance In Emerging Asia," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 16(1), pages 12-25, April.

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