The current account balance has long been an established indicator of an economy's external vulnerability. Countries with a current account deficit and an accumulated net debt position are considered vulnerable to a reversal in capital flows (sudden stop) which could lead to a painful adjustment...

Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience...