Sustainability of current account deficits in Nigeria: evidence from the asymmetric NARDL approach

Olufemi G. Onatunji ()
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Olufemi G. Onatunji: Redeemer’s University

SN Business & Economics, 2023, vol. 3, issue 10, 1-22

Abstract: Abstract This present paper revisits the issue of the sustainability of Nigeria’s current account deficit, using the intertemporal budget constraint (IBC) framework over the period 1986–2019. We employ the Non-linear Autoregressive Distributed Lag (NARDL) technique to detect the asymmetric mean-reversion behaviour of the current account deficit in Nigeria. The empirical results indicate that the asymmetric behaviour of the current account deficit is sustainable in Nigeria as the changes in imports respond differently to exports, although the extent of the sustainability is weak. Hence, the empirical outcomes of the paper offer considerable policy implications for policymakers seeking to sustain the current account deficit in Nigeria.

Keywords: Current account deficits; Sustainability; NARDL cointegration; Nigeria (search for similar items in EconPapers)
JEL-codes: F30 F32 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s43546-023-00566-6

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