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Current account balances in Central America 1974–1984: external and domestic influences

Published online by Cambridge University Press:  05 February 2009

William Loehr
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Summary

This paper examines the sensitivity of current account balances to several important variables. Variables are classified as external and domestic. External variables are those over which Central American countries have little or no control. In this study external variables are real interest rates in world capital markets, the terms of trade, and growth in the developed countries. Low real interest rates, improved terms of trade and rapid growth in the developed countries would be expected to improve current account balances. Domestic variables include budget deficits and real exchange rates. These are factors over which Central American countries do have control. Budget deficits and appreciations of real exchange rates can be expected to cause deteriorations in current account balances.

Type
Articles
Information
Journal of Latin American Studies , Volume 19 , Issue 1 , May 1987 , pp. 87 - 111
Copyright
Copyright © Cambridge University Press 1987

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References

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