Table 18.

The effect of fiscal consolidation on current account for middle-income countries

	Dynamic Panel Estimation SGMM
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{CA}}_{it-1}$	1.216*** (0.299)	1.073*** (0.119)	0.996*** (0.176)	0.865*** (0.181)	0.720*** (0.103)	0.851*** (0.165)
${\mathit{fa}}_{\mathit{it}}$	0.865** (0.376)	0.839** (0.405)	0.823** (0.381)	0.915** (0.361)	0.900** (0.372)	0.895** (0.372)
${\mathit{corrup}}_{\mathit{it}}$		−0.588 (0.205)	−0.976 (0.798)	−1.106* (0.554)	−1.185* (0.609)	−0.853 (0.511)
${\mathit{debt}}_{\mathit{it}}$			0.056 (0.058)	0.025 (0.027)	0.027 (0.032)	0.068** (0.033)
${\mathit{gdpg}}_{\mathit{it}}$				0.145** (0.067)	0.160* (0.092)	0.146* (0.075)
${\mathit{eldy}}_{\mathit{it}}$					−0.088 (0.137)	−0.142 (0.195)
${\mathit{young}}_{\mathit{it}}$						−0.079 (0.097)
N	162	145	145	144	144	144
groups	18	18	18	18	18	18
N-instr	6	11	11	13	14	15
AR(1)	0.049	0.028	0.043	0.063	0.064	0.057
AR(2)	0.486	0.468	0.410	0.418	0.424	0.425
Hansen	0.242	0.102	0.333	0.479	0.486	0.512

Robust standard errors are in parentheses. Regressions are based on the Blundell-Bond estimator. Starting from the most parsimonious specification (column 1), we progressively introduce GDP growth, corruption, public debt, eldy and young population in columns (2)–(6). Significance level at which the null hypothesis is rejected: p < 0.1*; p < 0.05**; p < 0.01***