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Has the current account broken up with its fundamentals in Central and Eastern Europe?
Author(s) -
Coleman Simeon,
Cuestas Juan Carlos
Publication year - 2023
Publication title -
international journal of finance and economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 39
eISSN - 1099-1158
pISSN - 1076-9307
DOI - 10.1002/ijfe.2458
Subject(s) - economics , current account , financial crisis , sovereign debt , ordinary least squares , capital (architecture) , capital flows , european debt crisis , estimation , monetary economics , econometrics , macroeconomics , sovereignty , international economics , exchange rate , geography , european union , european integration , political science , profit (economics) , management , archaeology , politics , law , microeconomics
Substantial capital outflows across Europe following the 2007/8 Global Financial Crisis and 2010 European Sovereign Debt crisis raise concerns regarding potential capital outflows from the economies of Central and Eastern European countries. To shed light on country‐level factors that can mitigate crisis and potential capital outflows across these countries, this article investigates which factors have influenced the evolution of their current accounts. Our analyses, using dynamic ordinary least squares, suggest that the long‐run determinants of the current account have indeed changed over time, and threshold cointegrated estimates also confirm that, for each country, the parameters are dependent on thresholds for certain variables and there is significant heterogeneity across the countries. Our overall results are robust to complementary analyses, such as threshold estimation approach. We comment on some possible implications of these differences.