Nihat IŞIK, Suat Serhat YILMAZ, Efe Can KILINÇ

The Relationship Between Current Account Balance and Types of Credits: An Application on Selected OECD Countries

While in literature that the current account deficit to GDP ratio exceeds the level 4-5 is considered as a leading indicator of crisis in economies, solution proposals to this issue is of vital importance in terms of countries. By the reason of increasing purchasing power, the rise in credits has a serious impact on the increase of the current account deficit without ignoring the importance of other factors. Within this scope, in the study, the relationship between current account balance and the credits to firms, households and government has been estimated by using PMGE and MGE in 26 selected OECD countries for the years between 2005Q1 and 2015Q2. The findings obtained showed that while the credits given to households and firms have a negative impact on the current account balance in short-run, the credits to firms and government have positive effect on it in long-run.

The Relationship between Current Account Balance and Types of Credits: An Application on Selected OECD Countries

Keywords:

Current Account Balance, Credits, Panel Data Analysis,

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