On the Stationarity of Current Account Deficits in the European Union |
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| Authors: | Mark J Holmes Jesús Otero Theodore Panagiotidis |
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| Institution: | 1. Department of Economics, Waikato University, New Zealand;2. Facultad de Economía, Universidad del Rosario, Bogotá, Colombia;3. Department of Economics, University of Macedonia, Greece;4. Work on this paper began while Jesús Otero was a Visiting Fellow in the Department of Economics at the University of Warwick. For this, we thank the Universidad del Rosario for its financial assistance. We are grateful for helpful comments received from seminar participants at the University of Canterbury, the 2007 Australasian Meeting of the Econometric Society (ESAM), and an anonymous referee. The usual disclaimer applies. |
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| Abstract: | In this paper, we test for the stationarity of EU current account deficits. Our testing strategy addresses two key concerns with regard to unit‐root panel data testing, namely (i) the identification of which panel members are stationary, and (ii) the presence of cross‐sectional dependence. For this purpose, we employ an AR‐based bootstrap approach to the Hadri (2000 ) test. While there is only mixed evidence that current account stationarity applies when examining individual countries, this does not appear to be the case when considering panels comprising both EU and non‐EU members. |
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