Transmission mechanisms of U.S. macroeconomic shocks to Vietnam’s balance of payments: An ARDL approach

This study examines the transmission mechanisms through which U.S. macroeconomic shocks affect Vietnam’s balance of payments using quarterly data from 2010Q1 to 2025Q4 and an ARDL-ECM approach. Bounds testing confirms the existence of long-run relationships in all three models. In the long run, the U.S. real interest rate and inflation have positive and statistically significant effects on the current account, while the U.S. real interest rate has a negative effect on the capital and financial account. The effects on the overall balance of payments are weaker, suggesting offsetting movements among external-sector components. In the short run, responses in the current account and the capital and financial account mainly occur with lags. The negative and statistically significant error-correction coefficients in all three models confirm adjustment toward long-run equilibrium. The findings highlight the importance of the interest rate–capital flow channel and the interaction among external-sector components in absorbing external shocks.