Sustainability of external imbalances in the OECD countries

In this article, we provide a test of the sustainability of external imbalances in the OECD countries over the period 1970 to 2007, i.e., before the beginning of the international financial crisis. Specifically, we deal with the case of those countries that have experienced current account deficits in more than half of the years throughout the period of analysis, and address the recent critique of Bohn (2007) on unit root and cointegration tests of the intertemporal budget constraint.