Current Account Sustainability: Selected East Asian and Latin American Experiences
Gian Maria Milesi-Ferrett, Assaf Razin
NBER Working Paper No. 5791 (Also Reprint No. r2111)
A number of developing countries have run large and persistent current account deficits in both the late seventies/early eighties and in the early nineties, raising the issue of whether these persistent imbalances are sustainable. This paper puts forward a notion of current account sustainability and compares the experience of three Latin American countries -- Chile, Colombia and Mexico -- and three East Asian countries--Korea, Malaysia and Thailand. It identifies a number of potential sustainability indicators and discusses their usefulness in predicting external crises.
Published: Princeton Studies in International Finance, no. 81, (October 1996).