Fiscal Policy and the Current Account

WPIEA2010121 Image
Price:  $18.00

Author/Editor: Jacques Bouhga-Hagbe, S. M. Ali Abbas, Ricardo Velloso, Antonio J. Fatas, Paolo Mauro
Release Date: © May, 2010
ISBN : 978-1-45520-080-1
Stock #: WPIEA2010121
Stock Status: On back-order

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This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector autoregressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the fiscal balance by 1 percentage point of GDP is associated with a current account improvement of 0.2–0.3 percentage point of GDP. This association is as strong in emerging and low-income countries as it is in advanced economies; and significantly higher when output is above potential.


Balance of payments , Current account , Economic policy , Fiscal policy

More publications in this series: Working Papers

More publications by: Jacques Bouhga-Hagbe ; S. M. Ali Abbas ; Ricardo Velloso ; Antonio J. Fatas ; Paolo Mauro