Rapid Current Account Adjustments : Are Microstates Different? / Patrick Imam.

Format:

Book

Government document

Author/Creator:

Imam, Patrick.

Series:

IMF Working Papers; Working Paper ; No. 2008/233

IMF working paper ; WP/08/233

IMF Working Papers

Language:

English

Subjects (All):

States, Small--Economic conditions--Econometric models.

States, Small.

Balance of payments--Econometric models.

Balance of payments.

Foreign exchange rates--Econometric models.

Foreign exchange rates.

Structural adjustment (Economic policy)--Econometric models.

Structural adjustment (Economic policy).

Physical Description:

1 online resource (30 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2008.

Language Note:

English

Summary:

We describe unique aspects of microstates-they are less diversified, suffer from lumpiness of investment, they are geographically at the periphery and prone to natural disasters, and have less access to capital markets-that may make the current account more vulnerable, penalizing exports and making imports dearer. After reviewing the "old" and "new" view on current account deficits, we attempt to identify policies to help reduce the current account. Probit regressions suggest that microstates are more likely to have large current account adjustments if (i) they are already running large current account deficits; (ii) they run budget surpluses; (iii) the terms of trade improve; (iv) they are less open; and (v) GDP growth declines. Monetary policy, financial development, per capita GDP, and the de jure exchange rate classification matter less. However, changes in the real effective exchange rate do not help drive reductions in the current account deficit in microstates. We explore reasons for this and provide policy implications.

Contents:

Contents; I. Introduction; II. Evolution of the Current Account of Microstates, 1980-2005; III. Unique Aspects of the Current Account of Microstates; IV. "Old" Versus "New" View of the Current Account; V. Rapid Current Account Adjustment; VI. Conclusions and Policy Implications; VII. References; Appendix 1: Stylized Facts on The Current Account After Persistent Terms of Trade Shocks; Identifying Persistent Negative Terms of Trade Shocks; Current Account After Terms of Trade Changes

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF front page (ebrary, viewed February 26, 2014).

ISBN:

9786612841842

9781462389087

1462389082

9781452738987

145273898X

9781282841840

128284184X

9781451870916

1451870914

OCLC:

465418230