Persistent external deficits are a recurrent phenomena in low and middle income countries. We define a new empirical measure to identify balance of payment crises related to the accumulation of persistent external deficits. Using a non-parametric difference-in-differences estimator we identify...

Persistent current account deficits are common among low- and middle-income countries. We evaluate when this situation triggers a crisis and characterize it. Using a non-parametric estimator, we find a critical value for the yearly current account deficit just before the crisis sets off. These...