The Relationship between Current Account Balance and Types of Credits: An Application on Selected OECD Countries

Yıl 2017, Cilt: 7 Sayı: 2, 105 - 126, 30.12.2017

Nihat Işık , Suat Serhat Yılmaz , Efe Can Kılınç

Öz

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.

Anahtar Kelimeler

Current Account Balance, Credits, Panel Data Analysis

The Relationship Between Current Account Balance and Types of Credits: An Application on Selected OECD Countries

Öz

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.

Anahtar Kelimeler

Current Account Balance, Credits, Panel Data

Kaynakça

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