Current account balances in Central America 1974-1984

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

Control variable · Current account · Economics · Exchange rate · Interest rate · International economics · Monetary economics · Fiscal Policy and Economic Growth · Global Financial Crisis and Policies · Monetary Policy and Economic Impact

• Some theoretical and empirical issues relating to economic stabilization in developing countries

  Open Access•Mohsin S Khan, Malcolm Knight et al.•World Development•1982

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