We assess some of the explanations that have been put forward for the global pattern of current account
imbalances that has emerged in recent years, particularly the large U.S. current account deficit and the
large surpluses of the Asian developing economies. Adopting a panel-regression approach, as in Chinn
and Prasad (2003. Medium-term determinants of current accounts in industrial and developing countries:
an empirical exploration. Journal of International Economics 59, 47e76), we find that the Asian surpluses
are well explained by a model that incorporates, in addition to standard determinants, the impact of financial
crises on current accounts. However, our model, even when augmented by measures of institutional
quality, fails to explain the large U.S. current account deficit.