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A1549
Title: Current account determinants in a globalized world Authors:  Mariam Camarero - University Jaume I (Spain) [presenting]
Josep Lluis Carrion-i-Silvestre - Universitat de Barcelona (Spain)
Cecilio Tamarit - University of Valencia (Spain)
Abstract: The individual determinants of external imbalances are explored for 24 developed and emerging countries. In addition to the variables considered as traditional determinants of the current account, the purpose is to contribute to the existing literature by exploring a large annual dataset from 1972 until 2020 and including variables embedding external disequilibria in third countries. The cointegration analysis allows for one structural break that might capture the change in the importance of the different determinants over time. Empirical evidence supports the inclusion of parameter instabilities to model external imbalances, with an explicit heterogeneous behaviour of the countries in the position of the estimated break dates. Moreover, the results show the critical role of third countries' external disequilibria in an ever more globalized world.