Impact of Current Account Deficit on Economic Growth

Abstract

A series of dramatic changes has been observed across the financial sector, primarily due to the imperative impact of globalization. Globalization has brought in a paradigm shift in the international trade performance. Over the past period of time, diametrically opposite arguments have been advocated by different economic policy makers, regarding the probable impact of current account divergence on sustainable economic development. More recently, financial crisis at international label has become an important debatable issue, whether the current account imbalance do affect the emergence of bubbles and transmission causing a financial crises. Thus, the risk of financial crisis has become a more important factor affecting the gap between the current account and the value consistency. Which in turn became a fundamental practice for designing an optimal policy for addressing the issue of maintaining the equilibrium of balance of payment. newlineIn this study, First Chapter gives an introductory layout and literature reviews on Balance of Payment and Current Account Balance. Second Chapter entitled Research Methodology presents a brief outline of the procedure used in conducting the study. In Chapter third, the profile of BRICS countries have been elaborated, along with their performance based upon selected variable of this study. Chapter fourth deals with the presentation of results of analyzed data in context of variables of this study. In Chapter fifth, Conclusions and Suggestions have been drawn on the basis of impact of selected determinants on Current Account Balance in selected countries. newlineIn the present scenario of globalization of world economy, it has been observed that a pressure is felt by nations to maintain the growth equilibrium on account of its international trade transitions. Future researches can be extended over the present study by means of involving a larger study sample and use of some specific modeling and simulation techniques to reveal the real life impact of independent variables affecting Current Account Balance. newline newline