Affiliations: Bank of Italy, DG Economics, Statistics and Research, Balance of Payments Analysis Division, Rome, Italy
Correspondence:
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Corresponding author: Claire Giordano, Banca d’Italia, DG Economics, Statistics and Research, Balance of Payments Analysis Division – Via Nazionale 91 – 00184, Rome, Italy. E-mail: claire.giordano@bancaditalia.it.
Note: [1] A working paper version of this article is published as [1].
Abstract: The study outlines the main challenges in measuring external imbalances via a “current account (CA) model”, from which a CA “norm” may be derived and against which the actual CA is appraised. The selection of both the dependent and explanatory variables and technical issues in the estimation procedure are amongst the concerns raised. The impact on CA modelling of global trends, such as the expansion of MNEs, and of the COVID-19 pandemic is also discussed. The paper does not prescribe fully-fledged solutions, but rather provides awareness and hints on how to possibly tackle at least some of these challenges.
Keywords: Current account balance, cyclically-adjusted current account, external imbalancesJEL: F00; F20; F32; F41
