Medium-Term Determinants of Current Accounts in Industrial and Developing Countries

This paper provides an empirical investigation of the medium-term determinants of current accounts for a large sample of industrial and developing countries. The analysis is based on a structural approach that highlights the roles of the fundamental macroeconomic determinants of saving and investment. Cross-section and panel regression techniques are used to characterize the properties of current account variation across countries and over time. Current account balances are positively correlated with government budget balances and initial stocks of net foreign assets. Among developing countries, measures of financial deepening are positively correlated while indicators of openness to international trade are negatively correlated with current account balances.Developing countries;Developed countries;Savings;current account, current accounts, current account balances, current account deficits, budget balance, current account surpluses, current account positions, external debt, current account balance, budget balances, capital account, balance of payments, current account deficit, current account position, current account dynamics, foreign aid, domestic saving, current account response, external liabilities, capital account transactions, current account transactions, long-term external debt, debt data, external financing, external debt data