A country's external imbalances are measured by the main international institutions by comparing the actual current account balance with that estimated by a "current account model". The study discusses the main methodological traits and issues of these models, also as a result of recent structural developments, such as the expansion of multinational enterprises (MNEs), and the COVID-19 pandemic.
The study provides some insights into the methodological choices underlying current account models, such as the measurement and selection of the variables to be included and the estimation procedure to be adopted. It underscores how globalization and the pandemic warrant a redesign of the existing models in order to include new variables, such as the weight of MNEs, health expenditure and the degree of participation in global value chains.
Published in 2020 in: Journal of Economic and Social Measurement, v. 45, 3-4, pp. 255-294.
