nach oben

Erschienen in:

2022 | OriginalPaper | Buchkapitel

An Assessment of India’s Current Account Sustainability and Adjustment: A Nonlinear Framework

verfasst von : Archana Kulkarni

Erschienen in: Studies in International Economics and Finance

Verlag: Springer Singapore

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

We examine the nature of adjustment of the current account for India using quarterly data from 1996Q2 to 2019Q4. We find evidence of three types of nonlinearities—structural break, sign and size nonlinearity. Using a host of nonlinear unit root tests, we demonstrate that the ratio of current account to GDP for India is stationary. Nonlinearity and stationarity together imply that India’s current account is sustainable over the sample period and exhibits asymmetric adjustment. This may explain why the current account behaviour is characterized by persistent yet small deficits. We also estimate logistic smooth transition autoregressive and vector autoregressive models to examine the dynamics of the current account and the influence of other explanatory variables such as the exchange rate and interest rate on the current account.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel Trade Balance and Need of National Reserves in Face with Aging Population

Nächstes Kapitel Current Account Balances and Non-financial Corporate Savings—A Cross-Country Perspective

Abadir, K. M., & Distaso, W. (2007). Testing joint hypotheses when one of the alternatives is one-sided. Journal of Econometrics, 140(2), 695–718.CrossRef

Algieri, B., & Bracke, T. (2011). Patterns of current account adjustment—Insights from past experience. Open Economies Review, 22, 401–425.CrossRef

Behera, H. K., & Yadav, I. S. (2019). Explaining India’s current account deficit: a time series perspective. Journal of Asian Business and Economic Studies, 26(1). https://doi.org/10.1108/jabes-11-2018-0089.

Chen, S. W. (2014). Smooth transition, nonlinearity and current account sustainability: Evidence from the European countries. Economic Modelling, 38, 541–554.CrossRef

Chen, S. W., & Xie, Z. (2015). Testing for current account sustainability under assumptions of smooth break and nonlinearity. International Review of Economics and Finance, 38, 142–156.CrossRef

Christopoulos, D., & León-Ledesma, M. (2010). Current account sustainability in the US: What did we really know about it? Journal of International Money and Finance, 29(3), 442–459.CrossRef

Clarida, R. H., Goretti, M., & Taylor, M. P. (2007). Are there thresholds of current account adjustment in the G7? In R. H. Clarida (Ed.), G7 current account imbalances: Sustainability and adjustment (pp. 169–200). The University of Chicago Press.CrossRef

Clower, E., & Ito, H. (2012). The persistence of current account balances and its determinants, ADBI Working Paper 400, Dec, 2012. Asian Development Bank Institute.

Cook, S., & Vougas, D. (2009). Unit root testing against an ST-MTAR alternative: Finite-sample properties and an application to the UK housing market. Applied Economics, 41, 1397–1404.CrossRef

Edwards, S. (2004). Thirty years of current account imbalances, current account reversals, and sudden stops. International Monetary Fund Staff Papers, 51, 1–49.

Enders, W., & Granger, C. W. J. (1998). Unit-root tests and asymmetric adjustment with an example using the term structure of interest rates. Journal of Business and Economic Statistics, 16(3), 304–311.

Freund, C. (2005). Current account adjustment in industrial countries. Journal of International Money and Finance, 24(8), 1278–1298.CrossRef

Garg, B., & Prabheesh, K. P. (2020). Testing the intertemporal sustainability of current account in the presence of endogenous structural breaks: Evidence from the top deficit countries. Economic Modelling, 97, 365–379.CrossRef

Hansen, B. E. (1999a). Testing for linearity. Journal of Economic Surveys, 13(5), 551–576.CrossRef

Hansen, B. E. (1999b). The grid bootstrap and the autoregressive model. Review of Economics and Statistics, 81, 594–607.CrossRef

Hasdemir, E., Omay, T., & Dulal, Z. S. (2019). Testing the current account sustainability for BRICS countries: Evidence from a nonlinear framework. Economics Bulletin, 39(1), 310–320.

Herz, B., & Hohberger, S. (2013). Fiscal policy, monetary regimes and current account dynamics. Review of International Economics, 21(1), 118–136.CrossRef

Holmes, M. J., Panagiotidis, T., & Sharma, A. (2011). The sustainability of India’s current account. Applied Economics, 43(2), 219–229.CrossRef

Hu, J., & Chen, Z. (2016). A unit root test against globally stationary ESTAR models when local condition is non-stationary. Economics Letters, 146, 89–94.CrossRef

Kapetanios, G., Shin, Y., & Snell, A. (2003). Testing for a unit root in the nonlinear STAR framework. Journal of Econometrics, 112(2), 359–379.CrossRef

Kruse, R. (2011). A new unit root test against ESTAR based on a class of modified statistics. Statistical Papers, 52(1), 71–85.CrossRef

Lee, T. H., White, H., & Granger, C. W. J. (1993). Testing for neglected nonlinearity in time series models. Journal of Econometrics, 56, 269–290.CrossRef

Leybourne, S., Newbold, P., & Vougas, D. (1998). Unit roots and smooth transitions. Journal of Time Series Analysis, 19(1), 83–97.CrossRef

Mann, C. L. (2002). Perspectives on the U.S. current account deficit and sustainability. Journal of Economic Perspectives, 16(3), 131–152.

Milesi-Ferretti, G. M., & Razin, A. (1998). Sharp reductions in current account deficits: An empirical analysis. European Economic Review, 42(3–5), 897–908.CrossRef

Nahata, P. (2021, March 31). India’s current account returns to deficit as economy normalises. Bloomberg Quint. https://www.bloombergquint.com/economy-finance/indias-current-account-returns-to-deficit-as-economy-normalises. Accessed 15 June 2021.

Reserve Bank of India. (2004). Report on currency and finance: Current account dynamics in an open economy (Chap. 5, Sect. 5.28), 28th Jan, 2004. https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=357

Sahoo, M., Babu, M. S., & Dash, U. (2017). Long run sustainability of current account balance of China and India: New evidence from combined cointegration test. Intellectual Economics, 10(2), 78–91.CrossRef

Singh, T. (2015). Sustainability of current account deficits in India: An intertemporal perspective. Applied Economics, 47(46), 4934–4951.

Shastri, S., Giri, A. K., & Mohapatra, G. (2018). An empirical assessment of current accounts sustainability for major South Asian Economies. South Asian Journal of Business Studies, 7(2), 172–188.CrossRef

Sollis, R. (2004). Asymmetric adjustment and smooth transitions: A combination of some unit root tests. Journal of Time Series Analysis, 25(3), 409–417.CrossRef

Taştan, S., & Arıç, K. (2015). Is current account of Turkey sustainable? Evidence from nonlinear unit root tests. The Romanian Economic Journal, 18(57), 95–114.

Taylor, A. M. (2002). A century of current account dynamics. Journal of International Money and Finance, 21(6), 725–748.CrossRef

Terasvirta, T. (1994). Specification, estimation and evaluation of smooth transition autoregressive models. Journal of American Statistical Association, 89, 208–218.

Trehan, B., & Walsh, C. (1991). Testing intertemporal budget constraints: Theory and applications to US federal budget deficits and current account deficits. Journal of Money, Credit and Banking, 26(2), 206–223.CrossRef

Titel: An Assessment of India’s Current Account Sustainability and Adjustment: A Nonlinear Framework
verfasst von: Archana Kulkarni
Verlag: Springer Singapore
Buch: Studies in International Economics and Finance
Print ISBN: 978-981-16-7061-9

Electronic ISBN: 978-981-16-7062-6

Copyright-Jahr: 2022
DOI: https://doi.org/10.1007/978-981-16-7062-6_18

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Premium Partner