Are current account deficits really sustainable in the G-7 countries?

► We examine the sustainability of the current account balances of the G-7 nations. ► We apply the unit root test with regime switching to the G-7. ► We find that the current account deficits are most likely to be sustainable for Germany and Japan. ► It signifies a red signal for the current account deficits of Canada, France, Italy, the UK or the US.