Abstract: Mean Reversion of Balance of Payments (BOP) is analyzed by panel data methodology using the first generation (Im, Pesaran and Shin’s and Levin, Lin and Chu t-test) and the second generation (cross-sectional augmented ADF statistics) unit root tests on 24 OECD countries over the years ranging from 1982 to 2007. Both of the cross-sectional independence and cross-sectional dependence test results we obtained illustrate that BOP is mean reverting. It follows that the BOP will return to its trend path over time and the assumption of Mundell-Fleming model will be validated. These findings provide strong evidence for the assumption of Mundell-Fleming model.