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Are Australia's Current Account Deficits Excessive?

This paper compares the evolution of the Australian current account balance over the period 1954–94 against an optimal current account derived from a consumption-smoothing model. The findings indicate that the Australian current account was not used to smooth consumption optimally in the period prio...

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Bibliographic Details
Main Author: McDermott, C.
Other Authors: Cashin, Paul
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1996
Series:IMF Working Papers
Subjects:
Wealth
Investments, Foreign
Macroeconomic Aspects Of International Trade And Finance: Forecasting And Simulation
Current Account
Short-term Capital Movements
Saving
Current Account Adjustment
Balance Of Payments
External Position
Long-term Capital Movements
Open Economy Macroeconomics
Exports And Imports
International Economics
National Accounts
Consumption; Economics
Foreign Liabilities
Current Account Balance
Consumption
Macroeconomics
Macroeconomics: Consumption
Current Account Deficits
International Investment
Australia
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper compares the evolution of the Australian current account balance over the period 1954–94 against an optimal current account derived from a consumption-smoothing model. The findings indicate that the Australian current account was not used to smooth consumption optimally in the period prior to the relaxation of capital controls in the early 1980s. The results also suggest that in the period since the mid-1980s Australia’s current account deficits have become excessive, and that the increase in national saving required to satisfy its external borrowing constraint is about 2 to 4 percent of GDP.
Physical Description:28 pages
ISBN:9781451850703

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