Macroeconomic volatility boosts current account balance in developing economies post-GFC.
The relationship between economic volatility and current account balances is more complex than previously thought. Increased volatility improves the current account in advanced economies but not in developing ones before the global financial crisis. However, after the crisis, volatility is linked to better current account balances in developing countries but not in advanced ones. The differences are mainly seen in how exports and exchange rates behave.