The Relationship Between the Current Account Balance and Economic Growth in Developing Countries: Panel Data Analysis

This study investigates the short term causality relations between current account balance and economic growth in developing countries. For this purpose, in contrast to other studies, this study examines the causality relations of 10 developing countries with Pedroni Panel Cointegration Analysis (1999) and Panel Vector Error Correction Models (Panel VECM) for the data period of 1981-2010. The results of analysis show that between there has been long-term cointegration relation the series in examined countrie, and there has been positive causality relation from current account balance to economic growth and negative causality relation from economic growth to current account balance in long-term.