IMF Working Papers

IMF Working Papers
Journal
Publisher:
International Monetary Fund
ISSN:
1018-5941
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
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Growth Following Investment and Consumption-Driven Current Account Crises

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Growth Following Investment and Consumption-Driven Current Account Crises
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Volume/Issue:
2013/217
Series:
IMF Working Papers
Author(s):
Alexander Klemm
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
October 2013
DOI:
http://dx.doi.org/10.5089/9781484321898.001
ISBN:
9781484321898
ISSN:
1018-5941
Page:
23
Current account deficits imply increasing liabilities to the rest of the world. External sustainability then depends on whether these can be met in the future without defaulting, i.e., normally through trade account surpluses. To run such surpluses without a fall in consumption, capital inflows should be used to increase future output. This paper tentatively finds that current account deficits reversals that follow investment booms are marked by better growth performance than those following consumption booms. It also shows that many recent large current account deficits have been predominantly the result of consumption or non-productive investment booms.
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