New Evidence on US Current Account Sustainability

Abstract

This paper deals with the sustainability of the US current account using fractional integration. We examine nominal and real exports and imports and their corresponding values deflated by GNP. The results show that only the variables deflated by GNP may contain unit roots, while nominal and real exports and imports are integrated of order d_x000D_ with d >1. In addition, the differences between export and imports are also nonstationary._x000D_ The possibility of structural breaks is also considered.