Analysis of the Current Account Position of Four Asian Countries Before the 1997 Crisis

The current paper presents an empirical analysis of the current account positions during the pre Asian crisis period, in the four most crisis-hit countries (namely Thailand, the Philippines, South Korea and Indonesia). We have employed the procedures advocated by Husted for the presence of stationarity in current accounts by estimating a cointegration relationship between any country's exports and imports. The results do not substantiate the presence of cointegration between the series, implying that the macroeconomic fundamentals in these countries prior to the crisis were far from robust, at least from the perspective of current account sustainability. Copyright 2007 Blackwell Publishing Ltd