Download full text
(258.1Kb)
Citation Suggestion
Please use the following Persistent Identifier (PID) to cite this document:
https://nbn-resolving.org/urn:nbn:de:0168-ssoar-241437
Exports for your reference manager
Current account composition and sustainability of external debt
[journal article]
Abstract If an economy runs a current account (CA) deficit and finances it via a corresponding net inflow of equity capital the external debt (ED) of the country does not change, i.e.: the CA deficit does not add to ED. This is no paradox and simply comes from the definition of CA deficit and ED and points t... view more
If an economy runs a current account (CA) deficit and finances it via a corresponding net inflow of equity capital the external debt (ED) of the country does not change, i.e.: the CA deficit does not add to ED. This is no paradox and simply comes from the definition of CA deficit and ED and points to different degrees of sustainability of CA deficits according to the way they are financed and to the composition of the CA itself.
By the evaluation of the determinants of interest rates spreads vis à vis US lending rates we assess the sustainability of CA deficits finding that FDI net inflows (proxy of equity capital) allow emerging economies to sustain imbalances larger with respect to CA deficits financed by inflows of more liquid assets. Equity capital as a way to finance the CA, not contributing to the ED, affects the solvency assessment of a country.... view less
Document language
English
Publication Year
2009
Page/Pages
p. 677-683
Journal
Applied Economics, 41 (2009) 5
DOI
https://doi.org/10.1080/00036840601007427
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)