International Journal of Business and Economics Volume 7, No. 1 April​, 2008

New Evidence on US Current Account Sustainability

Juncal Cuñado

Department of Economics, Universidad de Navarra, Spain

Luis Alberiko Gil-Alana

Department of Economics, Universidad de Navarra, Spain

Fernando Perez de Gracia

Department of Economics, Universidad de Navarra, Spain

Abstract

This paper deals with the sustainability of the US current account using fractional integration. We examine nominal and real exports and imports and their corresponding values deflated by GNP. The results show that only the variables deflated by GNP may contain unit roots, while nominal and real exports and imports are integrated of order d with d>1. In addition, the differences between export and imports are also nonstationary. The possibility of structural breaks is also considered.

Keywords：current account, fractional integration, long memory.

JEL Classifications：C22, F32.

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