1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Structural Policy Reforms and External Imbalances

It has been argued that one solution to global current account imbalances is for countries with current account surpluses to undertake structural reforms. This would raise their potential growth, which is assumed to put downward pressure on the current account position. This paper takes a closer look at how such structural reforms in labour markets, product markets, and financial markets could be expected to affect current accounts. It also tests empirically, using pooled time-series techniques (that control for the influence of relative cyclical positions, government fiscal balances and the real exchange rate), whether or not reforms in these areas would have any significant relationship with current accounts. The overall finding is that indicators of structural reforms do have a significant relationship with the current account but the contribution of these variables to explain current account positions is quite limited ...

English

Keywords: current account, structural reforms
JEL: J40: Labor and Demographic Economics / Particular Labor Markets / Particular Labor Markets: General; F32: International Economics / International Finance / Current Account Adjustment; Short-term Capital Movements
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