Contents
I. INTRODUCTION
II. EBA FRAMEWORK FOR CA AND REER ANALYSIS
III. POSITIVE ANALYSIS: THE EBA CURRENT ACCOUNT PANEL REGRESSION
A. Current account regression specification
B. Estimation
C. Country sample and sample period
D. Current account regression model
D.1 Traditional fundamentals: non-policy variables
D.2 Financial factors
D.3 Cyclical/temporary factors
D.4 Policy-related regressors
E. Effects on current account via saving or investment?
F. Fit of the CA regression
G. Other hypotheses explored in the CA regressions
IV. POSITIVE ANALYSIS: THE EBA REAL EXCHANGE RATE PANEL REGRESSION
A. The real effective exchange rate (REER) measure
B. Estimation method and sample
C. Explanatory variables and regression results
C.1 Non-policy fundamentals and financial factors
C.2 Policy-related regressors
D. Fit
E. Other hypotheses explored in the REER regressions
V. TOWARD NORMATIVE EVALUATION: ESTIMATION OF POLICY GAPS AND TOTAL GAPS
A. Policy gaps
B. Specifying benchmarks for policy variables
C. The final step: confirming multilateral consistency
VI. EBA EXTERNAL SUSTAINABILITY (ES) APPROACH
VII. INTERPRETING EBA RESULTS: RELEVANCE, RELIABILITY, AND PENDING ISSUES
References
Annexes
I. Glossary of Variables in Current Account and REER Regressions
II. Countries in the EBA Regression Samples
III. Role of Exhaustible Resources
IV. Financial Factors for EBA Methodology
V. Role of Structural Factors
VI. Suggested Policy Benchmark for Public Health Spending
Tables
1. EBA CA regression
2. EBA CA regression: Reserves and Capital Controls
3. EBA CA regression: Inspecting Monetary Policy
4. EBA CA regression: Savings and Investment Breakdown
5. EBA REER regression
6. EBA REER regression: Reserves and Capital Controls
7. EBA REER regression: Inspecting Monetary and Fiscal Policy
8. EBA CA regression: Alternative Financial Indicators (a)
9. EBA CA regression: Alternative Financial Indicators (b)
10. EBA CA regression: Structural Indicators
The body of this paper is identical to the “Technical Background” document posted on www.imf.org since August 2013. Further information on the EBA project, including datasets and the application of the EBA method to recent current accounts and exchange rates, is available at http://www.imf.org/external/np/res/eba/index.htm