Thousands of Models, One Story: Current Account Imbalances in the Global Economy

The global financial crisis is leading to a revival of the empirical literature on current account imbalances. This paper contributes to the literature by investigating the importance of model and parameter uncertainty to assess external imbalances. Panel data, current account models, model averaging A story emerges out of thousands possible models, expressed as a probability statement. The chance that, prior to the financial crisis, the world had a balanced current account constellation appears negligible.