Open AccessSustainability of current account balances in small states
Author(s) -
Jeetendra Khadan,
Amrita Deonarine
Publication year - 2020
Publication title -
economics and business letters
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.197
H-Index - 4
ISSN - 2254-4380
DOI - 10.17811/ebl.9.1.2020.14-20
Subject(s) - cointegration , sustainability , economics , current account , constraint (computer aided design) , econometrics , macroeconomics , current (fluid) , budget constraint , monetary economics , microeconomics , physics , mathematics , thermodynamics , exchange rate , ecology , geometry , biology
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.