A simple model of developing countries: financing the current account deficit

Soylu Ö. B.

Eastern Journal of European Studies, vol.11, no.1, pp.123-145, 2020 (ESCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 11 Issue: 1
  • Publication Date: 2020
  • Journal Name: Eastern Journal of European Studies
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus
  • Page Numbers: pp.123-145
  • Keywords: stock flow consistent models, current account deficit, developing countries, FLOW CONSISTENT MODEL, STOCK, GROWTH, CRISIS
  • Kocaeli University Affiliated: Yes

Abstract

A stock flow consistent model provides a monetary and financial framework to macroeconomics. It clearly shows the sources of financing for investments and also answers the following questions: Where does the finance for investment come from? and How are budget and current account deficits financed? This paper presents a simple stock flow consistent model for the developing countries with current account deficits. Most of these countries seem to cover the current account deficit by public borrowing and private sector borrowing. For this purpose, the motivation of this paper is based on the state of these countries and the modelling of their position.