Criteria of External Sustainability [electronic resource]
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TextSeries: IMF Working Papers; Working Paper ; No. 88/60Publication details: Washington, D.C. : International Monetary Fund, 1988Description: 1 online resource (26 p.)ISBN: 1451965206 :ISSN: 1018-5941Subject(s): Current Account Balance | Current Account Imbalance | Current Account Imbalances | Current Account | Foreign Debt | Germany | Japan | United StatesAdditional physical formats: Print Version:: Criteria of External SustainabilityOnline resources: IMF e-Library | IMF Book Store Abstract: This paper analyzes the main conceptual issues that arise in assessing external sustainability with a view toward developing operational criteria for the purposes of multilateral surveillance. The main contribution of the analysis is to show how conditional forecasts of external imbalance may be generated in a consistent way that explicitly incorporates a mechanism for achieving sustainability. An index of external unsustainability is also derived that reflects the probability of future changes in policies expected by private agents over time.
This paper analyzes the main conceptual issues that arise in assessing external sustainability with a view toward developing operational criteria for the purposes of multilateral surveillance. The main contribution of the analysis is to show how conditional forecasts of external imbalance may be generated in a consistent way that explicitly incorporates a mechanism for achieving sustainability. An index of external unsustainability is also derived that reflects the probability of future changes in policies expected by private agents over time.
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