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Persistent current account deficits and balance of payments crises

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorPierri, Damian Rene
dc.contributor.authorMontes Rojas, Gabriel
dc.contributor.authorMira, José
dc.contributor.editorUniversidad Carlos III de Madrid. Departamento de Economíaes
dc.date.accessioned2022-02-24T15:48:08Z
dc.date.available2022-02-24T15:48:08Z
dc.date.issued2020-02-24
dc.description.abstractPersistent current account defficits are common among low- andmiddle-income countries. We evaluate when this situation triggers acrisis and characterize it. Using a non-parametric estimator, we finda critical value for the yearly current account defficit just before thecrisis sets of. These findings give rise to a different type of crises:countries that have increased their external indebtedness by an accumulated amount of at least 26%-31% of the GDP in a time span of 3 to 5 years, when they are hit by a crisis, they suffer a more severe recession than an average sudden stop. We call these events persistent balance of payment crises. This generates a consumption fall of 3.1% and a current account reversal 4.9 percentage points. We also contribute to the structural characterization of balance of payment crises. Using a canonical model augmented with an endogenous interest rate, given enough persistence of the GDP, we can replicate these stylized facts. In this sense, the variability of national income in countries which are external net debtors is critical.es
dc.identifier.issn2340-5031es
dc.identifier.urihttps://hdl.handle.net/10016/34239
dc.identifier.uxxiDT/0000001985es
dc.language.isoenges
dc.relation.ispartofseriesWorking paper. Economicsen
dc.relation.ispartofseries22-02es
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España*
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/*
dc.subject.jelF32
dc.subject.jelF41
dc.subject.otherPersistenceen
dc.subject.otherCurrent accounten
dc.subject.otherDebten
dc.subject.otherBalance of payment crisisen
dc.titlePersistent current account deficits and balance of payments crisesen
dc.typeworking paper*
dspace.entity.typePublication
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