Sustainability of Current Account Deficit in Selected OECD Countries: Panel Data Analysis with Multiple Structural Breaks under Cross-sectional Dependence

In this study, the sustainability of current account deficit has been tested for selected OECD countries by using 1976-2011 period data via the panel data analysis which consider cross-sectional dependency and multiple structural breaks. Cross-sectional dependence has been analyzed with LMadj, stationary of the series has been tested by means of the panel unit root test with multiple structural breaks, cointegration relationship between series has been tested by the panel cointegration test with multiple structural breaks and cointegration relationship has been observed. Cointegration coefficients have been estimated via the CCE and CCMGE methods. In the analysis result, it has been determined that current account deficits are sustainable in strongly form for Australia, Canada and Mexico and sustainable in weakly form for Finland, France, Greece, New Zealand, Poland, Turkey and whole panel.