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Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth

Year 2013, Volume: 13 Issue: 3, 351 - 365, 01.08.2013

Abstract

The purpose of this paper is to investigate the basic determinants of current account balance of former Soviet Union member countries in the years of 1995 to 2010. Empirical analysis base on panel data fi xed eff ect models that established for ten former union member countries and diff erent subgroups in terms of oil and natural gas wealth. The observed fi ndings for all country groups suggest that investment increase, fi nancial development and increase of young age dependency ratio deteriorate current account balance. Conclusions show that current account balance has inertia and high sustainability in non oil reach countries. However, in countries rich in oil and naturalgas, there is not such relation refl ecting high volatility of energy prices. In oil rich countries, changes in terms of trade and natural resource revenues are the most important determinants of current account variations. In addition, the twin defi cits hypothesis is supported for non oil rich countries. Moreover, estimation results not support cyclical properties and development stages hypothesis of current account balance in countries included in this study

References

  • Ando, A., Guiso, L., Terlizzese, D. ve Dorsainvil, D. (1992) “Saving among Young Households Evidence from Japan and Italy” Th e Scandinavian Journal of Economics, 94(2):233-250.
  • Aristovnik, A. (2006a) “Current Account Adjustments In Selected Transition Economies” William Davidson Institute Working Paper Series, No:813.
  • Aristovnik, A. (2006b) “Th e Determinants and Excessiveness of Current Account Deficits in Eastern Europe and the Former Soviet Union” William Davidson Institute Working Paper Series, No:827.
  • Aristovnik, A. (2006c) “Current Account Sustainability in Selected Transition Countries” William Davidson Institute Working Paper Series, No: 844.
  • Arezki, R. ve Hasanov, F. (2009) “Global Imbalances and Petrodollars” IMF Working Paper Series, No:09/89.
  • Barro, R.J. (1989) “Th e Ricardian Approach to Budget Deficits” Th e Journal of Economic Perspectives 3(2):37-54.
  • Bems, R. ve Filho, I.C. (2009) “Exchange Rate Assessments: Methodologies for Oil Exporting Countries” IMF Working Paper Series, No:09/281.
  • Benhima, K. ve Havrylchyk, O. (2006) “Current Account Reversals and Long Term Imbalances: Application to the Central and Eastern European Countries” CEPII Working Paper Series, No:27.
  • Bernheim, B.D. (1987) “Ricardian Equivalence: An Evaluation of Th eory and Evidence” NBER Macroeconomics Annual, 263-316.
  • Capasso, S. (2004) “Financial Markets, Development and Economic Growth: Tales of Informational Asymmetries” Journal of Economic Surveys 18(7):267-292.
  • Chinn, M.D. ve Ito, H. (2007) “Current Account Balances, Financial Development and Institutions: Assaying the World “Saving Glut”” Journal of International Money and Finance 26(4):546-569.
  • Chinn, M.D. ve Prasad, E.S. (2003) “Medium- term Determinants of Current Accounts in Industrial and Developing Countries: An Empirical Exploration” Journal of International Economics 59(1):47-76.
  • Clower, E. ve Ito, H. (2011) “Th e Persistence and Determinants of Current Account Balances: Th e Implications for Global Rebalancing” http://www. ssc.wisc.edu/~mchinn/CA_persistency_Clower_Ito. pdf,(26.06.2012).
  • Deaton, A. (1991) “Saving and Liquidity Constraints” Econometrica 59(5):1221-1248.
  • Deaton, A. (1992) “Household Saving in LDCs: Credit Markets, Insurance and Welfare” Th e Scandinavian Journal of Economics, 94(2):253-273.
  • De Melo, M., Denizer, C., Gelb, A. ve Tenev, S. (1997) “Circumstance and Choice: Th e Role of Initial Conditions and Policies in Transition Economies” Th e World Bank Policy Research Working Paper Series, No:1866.
  • Fleming, J.M. (1962) “Domestic Financial Policies under Fixed and under Floating Exchange Rates” International Monetary Fund Staff Papers, 9(3):369-380.
  • Freund, C. (2005) “Current Account Adjustment in Industrial Countries” Journal of International Money and Finance 24(8):1278-1298.
  • Gärtner, M. (2003) Macro Economics, United Kingdom, Pearson Education.
  • Gertler, M. (1988) “Financial Structure and Aggregate Economic Activity: An Overview” Journal of Money, Credit and Banking 20(3):559-588.
  • Greene, W.H. (2000) Econometric Analysis, Fourth Edition, New Jersey, Upper Saddle River Prentice Hall.
  • Gruber, J.W. ve Kamin, S.B. (2007) “Explaining the Global Pattern of Current Account Imbalances” Journal of International Money and Finance 26 (4):500-522.
  • Gylfason, T. (1999) Principles of Economic Growth, New York, Oxford University Press Inc.
  • Harberger, A.C. (1950) “Currency Depreciation, Income, and the Balance of Trade” Journal of Political Economy 58(1):47-60.
  • Herwartz, H. ve Siedenburg, F. (2007) “Determinants of Current Account Imbalances in 16 OECD Countries: An Out-of-Sample Perspective” Review of World Economics 143(2):349-374.
  • Hubbard, R.G. (2006) “Th e U.S. Current Account Deficit and Public Policy” Journal of Policy Modeling 28(6):665-671.
  • Hurd, M.D. (1990) “Research on the Elderly: Economic Status, Retirement, and Consumption and Saving” Journal of Economic Literature 28(2):565-637.
  • Kandil, M. ve Greene, J. (2002) “Th e Impact of Cyclical Factors on the U.S. Balance of Payments” IMF Working Paper Series, No:02/45.
  • Ketenci, N. (2010) “Major Determinants of Current Account in Russia” Transit Studies Review 17(4):790- 806.
  • Laursen, S. ve Metzler, L.A. (1950) “Flexible Exchange Rates and the Th eory of Employment” Th e Review of Economics and Statistics 32(4):281-299.
  • Levine, R. (1997) “Financial Development and Economic Growth: Views and Agenda” Journal of Economic Literature 35(2):688-726.
  • Lucas, R.E. (1990) “Why Doesn’t Capital Flow from Rich to Poor Countries?” Th e American Economic Review 80(2):92-96.
  • Obstfeld, M. (1982) “Aggregate Spending and the Terms of Trade: Is Th ere a Laursen-Metzler Eff ect?” Th e Quarterly Journal of Economics, 97(2):251-270.
  • Obstfeld, M. (2004) “External Adjustment” Review of World Economics,140(4):541-568.
  • Maddala, G.S. (2001) Introduction to Econometrics, Th ird Edition, England, John Wiley & Sons Ltd.
  • Mankiw, N.G. (2010) Makroekonomi, Ankara, Efil Yayınevi.
  • Mishkin, F.S. (2011) Para, Bankacılık ve Finansal Piyasalar İktisadı, Ankara, Akademi Yayıncılık.
  • Modigliani, F. (1986) “Life Cycle, Individual Th rift, and the Wealth of Nations” Th e American Economic Review, 76(3):297-313.
  • Morsy, H. (2009) “Current Account Determinants for Oil-Exporting Countries” IMF Working Paper Series, No:09/28.
  • Mundell, R.A. (1963) “Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates” Th e Canadian Journal of Economics and Political Science, 29(4):475-485.
  • Persson, T. ve Svensson, L.E.O. (1985) “Current Account Dynamics and the Terms of Trade: Harberger- Laursen-Metzler Two Generations Later” Journal of Political Economy 93(1):43-65.
  • Pattillo, C., Poirson, H. ve Ricci, L.(2002) “External Debt and Growth” IMF Working Paper Series, No:02/69.
  • Prasad, ES., Rajan, R.G. ve Subramanian, A. (2007) “Foreign Capital and Economic Growth” NBER Working Paper Series, No:13619.
  • Razgallah, B. (2004) “Th e Balance of Payments Stages ‘Hypothesis’: A Reappraisal” http://www.univ- orleans.fr/deg/GDRecomofi/Activ/razgallah_nice. pdf,(26.06.2012).
  • Roubini, N. ve Wachtel, P. (1998) “Current Account Sustainability in Transition Economies” NBER Working Paper Series, No:6468.
  • Sachs, J.D. (1981) “Th e Current Account and Macroeconomic Adjustment in the 1970s” Brookings Papers on Economic Activity, 12(1):201-282.
  • Sachs, J.D. (1982) “Th e Current Account in the Macroeconomic Adjustment Process” Scandinavian Journal of Economics 84(2):147-159.
  • Sachs J.D. ve Warner, A.M. (1996) “Achieving Rapid Growth in the Transition Economies of Central Europe” Harvard Institute for International Development Discussion Papers, No: 544.
  • Stock, J.H. ve Watson, M.W. (2003) Introduction to Econometrics, Boston, Addison-Wesley.
  • Svensson, L.E.O. ve Razin, A. (1983) “Th e Terms of Trade and the Current Account: Th e Harberger-Laursen- Metzler Eff ect” Journal of Political Economy 91(1):97
  • Wachtel, P. (1998) “Current Account Balances and External Debt in Transition Economies: Lessons for Central Asia”http://www.imf.org/external/np/eu2/ kyrgyz/pdf/pw.pdf, (26.06.2012).

Eski Sovyet Ülkelerinde Cari Hesap Dengesi Belirleyicileri ve Petrol Zenginliğinin Neden Olduğu Farklılıklar

Year 2013, Volume: 13 Issue: 3, 351 - 365, 01.08.2013

Abstract

Bu çalışmada eski Sovyetler Birliği ülkelerinde cari hesap dengesinin temel belirleyicilerinin araştırılması amaçlanmıştır.Bu amaçla, birlik üyesi on ülkenin, petrol-doğalgaz zenginliği bakımından farklı alt gruplarının 1995-2010 dönemine ait yıllık verileri ve panel sabit etkiler yöntemi kullanılmıştır. Tahmin sonuçları, tüm ülke gruplarında yatırım artışının, finansal gelişmenin ve genç nüfus oranı artışının cari hesap dengesini negatif yönde etkilediğine ilişkin bulgular sunmaktadır. Bulgular petrol ve doğalgaz bakımından zengin olmayan ülkelerde cari hesap dengesinin atalete ve yüksek sürdürülebilirlik özelliğine sahip olduğunu desteklemektedir. Fakat petrol ve doğalgaz bakımından zengin ülkeler için, enerji fiyatı dalgalanmalarının etkisini destekler şekilde cari hesap dengesi ataleti ve sürdürülebilirliği söz konusu değildir. Bu ülkelerde, ticaret haddinde ve doğal kaynak gelirlerindeki değişmeler cari hesap dengesi değişmelerinin en önemli belirleyicisidir. Bunların yanı sıra, ikiz açıklar hipotezi doğal kaynak bakımından zengin olmayan ülkeler için desteklenmektedir. Ayrıca, tahmin sonuçları, araştırma konusu ülkelerde cari hesap dengesinin konjonktür karşıtı özellikler taşımadığını ve gelişmenin aşamaları hipotezinin geçerli olmadığını gösterir

References

  • Ando, A., Guiso, L., Terlizzese, D. ve Dorsainvil, D. (1992) “Saving among Young Households Evidence from Japan and Italy” Th e Scandinavian Journal of Economics, 94(2):233-250.
  • Aristovnik, A. (2006a) “Current Account Adjustments In Selected Transition Economies” William Davidson Institute Working Paper Series, No:813.
  • Aristovnik, A. (2006b) “Th e Determinants and Excessiveness of Current Account Deficits in Eastern Europe and the Former Soviet Union” William Davidson Institute Working Paper Series, No:827.
  • Aristovnik, A. (2006c) “Current Account Sustainability in Selected Transition Countries” William Davidson Institute Working Paper Series, No: 844.
  • Arezki, R. ve Hasanov, F. (2009) “Global Imbalances and Petrodollars” IMF Working Paper Series, No:09/89.
  • Barro, R.J. (1989) “Th e Ricardian Approach to Budget Deficits” Th e Journal of Economic Perspectives 3(2):37-54.
  • Bems, R. ve Filho, I.C. (2009) “Exchange Rate Assessments: Methodologies for Oil Exporting Countries” IMF Working Paper Series, No:09/281.
  • Benhima, K. ve Havrylchyk, O. (2006) “Current Account Reversals and Long Term Imbalances: Application to the Central and Eastern European Countries” CEPII Working Paper Series, No:27.
  • Bernheim, B.D. (1987) “Ricardian Equivalence: An Evaluation of Th eory and Evidence” NBER Macroeconomics Annual, 263-316.
  • Capasso, S. (2004) “Financial Markets, Development and Economic Growth: Tales of Informational Asymmetries” Journal of Economic Surveys 18(7):267-292.
  • Chinn, M.D. ve Ito, H. (2007) “Current Account Balances, Financial Development and Institutions: Assaying the World “Saving Glut”” Journal of International Money and Finance 26(4):546-569.
  • Chinn, M.D. ve Prasad, E.S. (2003) “Medium- term Determinants of Current Accounts in Industrial and Developing Countries: An Empirical Exploration” Journal of International Economics 59(1):47-76.
  • Clower, E. ve Ito, H. (2011) “Th e Persistence and Determinants of Current Account Balances: Th e Implications for Global Rebalancing” http://www. ssc.wisc.edu/~mchinn/CA_persistency_Clower_Ito. pdf,(26.06.2012).
  • Deaton, A. (1991) “Saving and Liquidity Constraints” Econometrica 59(5):1221-1248.
  • Deaton, A. (1992) “Household Saving in LDCs: Credit Markets, Insurance and Welfare” Th e Scandinavian Journal of Economics, 94(2):253-273.
  • De Melo, M., Denizer, C., Gelb, A. ve Tenev, S. (1997) “Circumstance and Choice: Th e Role of Initial Conditions and Policies in Transition Economies” Th e World Bank Policy Research Working Paper Series, No:1866.
  • Fleming, J.M. (1962) “Domestic Financial Policies under Fixed and under Floating Exchange Rates” International Monetary Fund Staff Papers, 9(3):369-380.
  • Freund, C. (2005) “Current Account Adjustment in Industrial Countries” Journal of International Money and Finance 24(8):1278-1298.
  • Gärtner, M. (2003) Macro Economics, United Kingdom, Pearson Education.
  • Gertler, M. (1988) “Financial Structure and Aggregate Economic Activity: An Overview” Journal of Money, Credit and Banking 20(3):559-588.
  • Greene, W.H. (2000) Econometric Analysis, Fourth Edition, New Jersey, Upper Saddle River Prentice Hall.
  • Gruber, J.W. ve Kamin, S.B. (2007) “Explaining the Global Pattern of Current Account Imbalances” Journal of International Money and Finance 26 (4):500-522.
  • Gylfason, T. (1999) Principles of Economic Growth, New York, Oxford University Press Inc.
  • Harberger, A.C. (1950) “Currency Depreciation, Income, and the Balance of Trade” Journal of Political Economy 58(1):47-60.
  • Herwartz, H. ve Siedenburg, F. (2007) “Determinants of Current Account Imbalances in 16 OECD Countries: An Out-of-Sample Perspective” Review of World Economics 143(2):349-374.
  • Hubbard, R.G. (2006) “Th e U.S. Current Account Deficit and Public Policy” Journal of Policy Modeling 28(6):665-671.
  • Hurd, M.D. (1990) “Research on the Elderly: Economic Status, Retirement, and Consumption and Saving” Journal of Economic Literature 28(2):565-637.
  • Kandil, M. ve Greene, J. (2002) “Th e Impact of Cyclical Factors on the U.S. Balance of Payments” IMF Working Paper Series, No:02/45.
  • Ketenci, N. (2010) “Major Determinants of Current Account in Russia” Transit Studies Review 17(4):790- 806.
  • Laursen, S. ve Metzler, L.A. (1950) “Flexible Exchange Rates and the Th eory of Employment” Th e Review of Economics and Statistics 32(4):281-299.
  • Levine, R. (1997) “Financial Development and Economic Growth: Views and Agenda” Journal of Economic Literature 35(2):688-726.
  • Lucas, R.E. (1990) “Why Doesn’t Capital Flow from Rich to Poor Countries?” Th e American Economic Review 80(2):92-96.
  • Obstfeld, M. (1982) “Aggregate Spending and the Terms of Trade: Is Th ere a Laursen-Metzler Eff ect?” Th e Quarterly Journal of Economics, 97(2):251-270.
  • Obstfeld, M. (2004) “External Adjustment” Review of World Economics,140(4):541-568.
  • Maddala, G.S. (2001) Introduction to Econometrics, Th ird Edition, England, John Wiley & Sons Ltd.
  • Mankiw, N.G. (2010) Makroekonomi, Ankara, Efil Yayınevi.
  • Mishkin, F.S. (2011) Para, Bankacılık ve Finansal Piyasalar İktisadı, Ankara, Akademi Yayıncılık.
  • Modigliani, F. (1986) “Life Cycle, Individual Th rift, and the Wealth of Nations” Th e American Economic Review, 76(3):297-313.
  • Morsy, H. (2009) “Current Account Determinants for Oil-Exporting Countries” IMF Working Paper Series, No:09/28.
  • Mundell, R.A. (1963) “Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates” Th e Canadian Journal of Economics and Political Science, 29(4):475-485.
  • Persson, T. ve Svensson, L.E.O. (1985) “Current Account Dynamics and the Terms of Trade: Harberger- Laursen-Metzler Two Generations Later” Journal of Political Economy 93(1):43-65.
  • Pattillo, C., Poirson, H. ve Ricci, L.(2002) “External Debt and Growth” IMF Working Paper Series, No:02/69.
  • Prasad, ES., Rajan, R.G. ve Subramanian, A. (2007) “Foreign Capital and Economic Growth” NBER Working Paper Series, No:13619.
  • Razgallah, B. (2004) “Th e Balance of Payments Stages ‘Hypothesis’: A Reappraisal” http://www.univ- orleans.fr/deg/GDRecomofi/Activ/razgallah_nice. pdf,(26.06.2012).
  • Roubini, N. ve Wachtel, P. (1998) “Current Account Sustainability in Transition Economies” NBER Working Paper Series, No:6468.
  • Sachs, J.D. (1981) “Th e Current Account and Macroeconomic Adjustment in the 1970s” Brookings Papers on Economic Activity, 12(1):201-282.
  • Sachs, J.D. (1982) “Th e Current Account in the Macroeconomic Adjustment Process” Scandinavian Journal of Economics 84(2):147-159.
  • Sachs J.D. ve Warner, A.M. (1996) “Achieving Rapid Growth in the Transition Economies of Central Europe” Harvard Institute for International Development Discussion Papers, No: 544.
  • Stock, J.H. ve Watson, M.W. (2003) Introduction to Econometrics, Boston, Addison-Wesley.
  • Svensson, L.E.O. ve Razin, A. (1983) “Th e Terms of Trade and the Current Account: Th e Harberger-Laursen- Metzler Eff ect” Journal of Political Economy 91(1):97
  • Wachtel, P. (1998) “Current Account Balances and External Debt in Transition Economies: Lessons for Central Asia”http://www.imf.org/external/np/eu2/ kyrgyz/pdf/pw.pdf, (26.06.2012).
There are 51 citations in total.

Details

Other ID JA43EH53EE
Journal Section Research Article
Authors

Seymur Ağazade

Publication Date August 1, 2013
Published in Issue Year 2013 Volume: 13 Issue: 3

Cite

APA Ağazade, S. (2013). Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth. Ege Academic Review, 13(3), 351-365.
AMA Ağazade S. Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth. ear. August 2013;13(3):351-365.
Chicago Ağazade, Seymur. “Determinants of Current Account Balance in Former Soviet Countries and Diff Erences Caused by Oil Wealth”. Ege Academic Review 13, no. 3 (August 2013): 351-65.
EndNote Ağazade S (August 1, 2013) Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth. Ege Academic Review 13 3 351–365.
IEEE S. Ağazade, “Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth”, ear, vol. 13, no. 3, pp. 351–365, 2013.
ISNAD Ağazade, Seymur. “Determinants of Current Account Balance in Former Soviet Countries and Diff Erences Caused by Oil Wealth”. Ege Academic Review 13/3 (August 2013), 351-365.
JAMA Ağazade S. Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth. ear. 2013;13:351–365.
MLA Ağazade, Seymur. “Determinants of Current Account Balance in Former Soviet Countries and Diff Erences Caused by Oil Wealth”. Ege Academic Review, vol. 13, no. 3, 2013, pp. 351-65.
Vancouver Ağazade S. Determinants of Current Account Balance in Former Soviet Countries and Diff erences Caused by Oil Wealth. ear. 2013;13(3):351-65.