Intertemporal solvency of Turkey’s current account

Panoeconomicus

关键词: cointegration;    current account sustainability;    dynamic GLS;    intertemporal budget constraint;    Turkey;   

DOI  :  10.2298/PAN1201089B

来源: DOAJ

【 摘 要 】

We test for sustainability of Turkey’s current account position between 1987and 2009 using the intertemporal solvency model of Craig S. Hakkio and MarkRush (1991) and Steven Husted (1992). According to this approach, theintertemporal budget constraint is satisfied if there is cointegrationbetween exports and imports+ (which include imports, net interest income andunilateral transfer payments). We test for, and find evidence of,cointegration using the standard Johansen test as well as the Allan W.Gregory and Bruce Hansen (1996) test. The latter allows for a structuralbreak in the cointegrating relation. Further, dynamic GLS estimation shows astatistically significant relation between exports and imports+, although, wereject strong current account sustainability. Our evidence suggests thatTurkey remains vulnerable to reversals in capital flows, but we believe thisvulnerability will diminish as the service component of trade increases.

【 授权许可】

Unknown