School of Economics and Finance

No. 485: An Investigation of Current Account Solvency in Latin America Using Non Linear Stationarity Tests

Georgios Chortareas , University of Connecticut
George Kapetanios , Queen Mary, University of London
Merih Uctum , City University of New York

January 1, 2003

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Using a new methodology that allows for nonlinearities, we find frequent support for sustainability in the debt of a set of Latin American countries. Our findings overturn results obtained with traditional unit-root tests and provide a more realistic alternative to evaluate the external solvency of an economy.

J.E.L classification codes: C22, F32, F34

Keywords:Current account, Nonlinearity