While in literature that the current
account deficit to GDP ratio exceeds the level 4-5 is considered as a leading
indicator of crisis in economies, solution proposals to this issue is of vital
importance in terms of countries. By the reason of increasing purchasing power,
the rise in credits has a serious impact on the increase of the current account
deficit without ignoring the importance of other factors. Within this scope, in
the study, the relationship between current account balance and the credits to
firms, households and government has been estimated by using PMGE and MGE in 26
selected OECD countries for the years between 2005Q1 and 2015Q2. The findings
obtained showed that while the credits given to households and firms have a
negative impact on the current account balance in short-run, the credits to
firms and government have positive effect on it in long-run.
While in literature that the current
account deficit to GDP ratio exceeds the level 4-5 is considered as a leading
indicator of crisis in economies, solution proposals to this issue is of vital
importance in terms of countries. By the reason of increasing purchasing power,
the rise in credits has a serious impact on the increase of the current account
deficit without ignoring the importance of other factors. Within this scope, in
the study, the relationship between current account balance and the credits to
firms, households and government has been estimated by using PMGE and MGE in 26
selected OECD countries for the years between 2005Q1 and 2015Q2. The findings
obtained showed that while the credits given to households and firms have a
negative impact on the current account balance in short-run, the credits to
firms and government have positive effect on it in long-run.
Subjects | Economics |
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Journal Section | Karatekin İİBF |
Authors | |
Publication Date | December 30, 2017 |
Published in Issue | Year 2017 Volume: 7 Issue: 2 |