Are the Current Account Imbalances on a Sustainable Path?
Bibliographic record
Abstract
This paper examines the current accounts of 16 developed and developing countries over the period 1970 to 2018. We test whether these nations satisfy their intertemporal solvency condition for external imbalances. The solvency condition in the strong form entails: (1) a cointegration, or a long run equilibrium, relationship between exports and imports of goods and services; and (2) an increase in imports leading to a proportional increase in exports. Our findings imply that the external imbalances are a cause of vulnerability for several nations. Bangladesh satisfies the abovementioned solvency condition—in other words, its current account is sustainable in the strong form. Australia, Ecuador, Honduras, Mexico, New Zealand, and Venezuela show weak forms of sustainability. For these six nations, the presence of a cointegration relationship between exports and imports coincides with less than proportional increases in exports with increases in imports. The current accounts of Chile and Paraguay are unsustainable—while their exports and imports are cointegrated, a growth in imports leads to a more than proportional increase in exports. For a few nations that failed the full sample (1970–2018) cointegration test, we developed sub-samples by anchoring the start date at 1970 and increasing the sample by every five years from 1999 to 2014. From the sub-samples, we find evidence of intermittent, but weak, cases of sustainability for Peru and South Africa. We show that Panama’s current account became unsustainable after 2009. China’s current account satisfied the strong form of sustainability between all sub-samples until 2014 and became unsustainable in the most recent four years (2015–2018). France, the Philippines, and the United States unequivocally failed the intertemporal solvency test in the full sample and sub-sample analyses. The cointegration tests allow for structural breaks in exports and imports. We find these breaks have strong economic significance. For instance, we find that for most countries the structural break in exports coincides with their worst economic recession.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.006 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.002 | 0.003 |
| Science and technology studies | 0.001 | 0.002 |
| Scholarly communication | 0.003 | 0.006 |
| Open science | 0.000 | 0.002 |
| Research integrity | 0.001 | 0.001 |
| Insufficient payload (model declined to judge) | 0.011 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".