Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Notes on the contributors
- Acknowledgments
- Introduction
- 1 New Member States: macroeconomic outlook and forecasts
- 2 The asymmetric impact of enlargement on old and new Member States: a general equilibrium approach
- 3 Changes in the spatial distribution patterns of European regional activity: the enlargements of the mid-1980s and 2004
- 4 Forecasting macroeconomic variables for the new Member States
- 5 The cyclical experience of the new Member States
- 6 Demand and supply shocks in the new Member States
- 7 Monetary transmission in the new Member States
- 8 Promoting fiscal restraint in three Central European Member States
- 9 Current account dynamics in the new Member States
- 10 Challenges to banking sector stability in selected new Member States
- 11 Infrastructure investments as a tool for regional development policy: lessons from the Spanish evidence
- 12 TFP, costs and public infrastructure: an equivocal relationship
- 13 Regional policies after the EU enlargement
- Index
- References
9 - Current account dynamics in the new Member States
Published online by Cambridge University Press: 22 September 2009
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Notes on the contributors
- Acknowledgments
- Introduction
- 1 New Member States: macroeconomic outlook and forecasts
- 2 The asymmetric impact of enlargement on old and new Member States: a general equilibrium approach
- 3 Changes in the spatial distribution patterns of European regional activity: the enlargements of the mid-1980s and 2004
- 4 Forecasting macroeconomic variables for the new Member States
- 5 The cyclical experience of the new Member States
- 6 Demand and supply shocks in the new Member States
- 7 Monetary transmission in the new Member States
- 8 Promoting fiscal restraint in three Central European Member States
- 9 Current account dynamics in the new Member States
- 10 Challenges to banking sector stability in selected new Member States
- 11 Infrastructure investments as a tool for regional development policy: lessons from the Spanish evidence
- 12 TFP, costs and public infrastructure: an equivocal relationship
- 13 Regional policies after the EU enlargement
- Index
- References
Summary
Introduction
The twelve Central and Eastern European countries, which either joined the European Union (EU) in May 2004 or are scheduled to do so as early as 2007, often show high current account deficits, which are sometimes close or even beyond those values which common sense and past experience associate with a high probability of a balance-of-payment crisis. A natural question therefore arises: are these deficits sustainable or do some countries require policy action? A related question is how the current account is likely to evolve in the medium term, i.e. up to 2007. The aim of this chapter is to provide a tentative answer, by means of a normative analysis based on econometric estimation of the determinants of the current accounts to be used for a projection of external balances. The role of capital inflows, and in particular of foreign direct investment (FDI), is stressed.
The chapter is structured as follows. In section 9.2 the basic accounting identities, and some stylised facts about external balances in CEECs, are presented. Section 9.3 deals with the importance of the current account as a factor responsible for currency crises. A quick review of the standard methodologies used for current account assessment is presented in section 9.4. Section 9.5 summarises some empirical studies of the current account. In section 9.6, panel estimation of current account dynamics is performed; the results are then employed to simulate the future path of foreign debt accumulation, given some assumptions on growth and fiscal policy.
- Type
- Chapter
- Information
- Publisher: Cambridge University PressPrint publication year: 2006
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