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Title: On the sustainability of the EU's current account deficits
Authors: Holmes, Mark J.
Otero, Jesus
Panagiotidis, Theodore
Keywords: Heterogeneous dynamic panels
Current account sustainability
Panel stationarity test
Mean reversion
Issue Date: 2007
Abstract: In this paper, we test for the stationarity of EU current account deficits. Our testing strategy addresses two key concerns with regard to unit root panel data testing, namely (i) the identification of which members-states are stationary, and (ii) the presence of cross-sectional dependence. For this purpose, we employ a moving block bootstrap approach to the Hadri (2000) test. While there is evidence that current account sustainability applies to panels comprising EU members, this is not the case when non-EU economies are considered.
Description: This is a working paper. It is also available at: http://ideas.repec.org/p/lbo/lbowps/2007_6.html.
URI: https://dspace.lboro.ac.uk/2134/2744
ISSN: 1750-4171
Appears in Collections:Working Papers (Economics)

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