Sustainability of balancing item of balance of payments accounts: fresh empirical evidence for G7 countries

Abstract

Using a simple balance of payments accounts framework and unit root tests (with level shift), this study provides empirical evidence that, balancing items of balance of payments accounts in the G7 countries are sustainable. The findings of this article may have relevant implications.

Notes

¹ The data are in nominal terms and in local currency. This study uses nominal data in the analysis by considering the fact that BI is a noneconomic variable, but different between total debit and total credit of the current account. Perhaps, using real data may lose information. Consequently it fails to capture the actual patterns of the balancing item.