The sustainability of trade accounts of the G-7 countries

Abstract

This article has examined the sustainability of the trade accounts of the G-7 countries by analysing the long-run equilibrium between exports and imports. We applied the techniques of the recently developed nonstationary panel data analysis and found that the trade accounts of the G-7 countries are very likely to be nonstationary variables. This implies that trade accounts are not sustainable for the G-7 countries. Therefore, some appropriate policies must be implemented to prevent trade imbalances from increasing.

Notes

¹ For example, Mann (2002) has published an excellent survey on the topic.

² See Table 1 in Pedroni (1999, p. 660).