Project “OCA” is implemented within the framework of the National Recovery and Resilience Plan 2021–2026 and is financed by European Union funds through the NextGenerationEU instrument.
Addressing endogeneity and cross-sectional dependence is critical when analyzing external balances. Controlling for unobserved global factors while simultaneously tackling endogeneity via System GMM sheds new light on what truly drives current account determinants.
In fact, the findings suggest that global factors are not just something to control for - they might be the primary, first-order drivers of current account dynamics, challenging the traditional focus on purely domestic policies.
For the complete analytical framework and empirical estimates, see the full paper: "Common international disturbances and the illusion of domestic control: Reassessing the determinants of current account imbalances" | International Review of Economics & Finance: https://doi.org/10.1016/j.iref.2026.105591