Athens University of Economics and Business, Department of Economics
Tzavalis, Elias
Alogoskoufis, Georgios
The initial aim of this dissertation is to investigate the short- and long-term determinants of the current account balance through a sample of the nineteen Eurozone member states with the United States as a trading partner. Particularly, we would like to test hypotheses about the competitiveness between the Eurozone and the United States, the Ricardian equivalence versus the Keynesian view for the relation between the fiscal deficit and the current account deficit (the twin deficit hypothesis), the exchange rate volatility and examine the significance of other related factors which determine the current account balance. Additionally, we utilized the modern econometric techniques for panel data analysis, such as panel ARDL - the PMG estimator and panel unit root tests-, in order to examine how the chosen determinants, affect the current account balance. Quarterly data was used in a sample of the nineteen Eurozone member states with the United States as a trading partner over the period of 2008 until 2018. Through the empirical investigation, many of our hypotheses were confirmed i.e., we found that the current account balance in the long-run displays a positive association with the real exchange rate, the real interest rate, GDP per capita, and the exchange rate volatility, but on the other hand exhibits a negative association with the fiscal balance. At last, in the short-run, we discover that only the real exchange rate is a valid instrument for exercising economic policy.
Panel ARDL method
PMG method
Ισοζύγιο τρεχουσών συναλλαγών
Current account determinants
Economic policy